Agent Fees

[meiklejohn]

Hi

I'm sure this has been probably asked before so apologies in advance

When a property you would like to buy includes agency fees, is this the amount you would be allowed to mortgage on or would the fees have to be paid from your own cash reserves?

Thanks

[Judie]

Normally I'd have said that agency fees can't be included, and Notaire fees certainly can't, but I've a client who has been advised by his lender that agency fees can be included in the sum borrowed, although he can still only borrow 85%, so it's a bit swings and roundabouts.

[meiklejohn]

Thanks for that Judie

After speaking to some brokers today this was pretty much confirmed.

We are looking to borrow 90% of the purchase price and it's a fairly small mortgage too so our options are limited.

We have the deposit and the notaires fees and a little left over for decorating and emergencies but I didn't want to use this up on agent fees.

If the seller was paying the agent fees it would be ok although I think you would to pay a lttle more to the Notaire. Is this correct?

[Judie]

I'm glad that your brokers were able to confirm what I had said to you.

In my agency, it's always the buyer who pays the agency fees and I've never experienced it any other way so can't really comment on your question. We always have mandats signed between the sellers and us confirming, amongst other things, that our fees are paid by the purchaser

I think you may have to set your sights somewhat lower and buy a property that isn't going to stretch your budget in the way you currently envisage. It will always cost you more than you had imagined.

[Jimmy]

Check around - there are some good deals out there. When we first arrived here several years ago we included all agency/notaire fees in the price when we applied for mortgage, absolutely no problem. This year we re-mortgaged with a different bank to take advantage of the VERY low interest rate. You have, of course, to have proof of your income.

[mint]

Judie, I wouldn't normally dare argue with you as you are the professional amongst us.

I do understand that it's the buyers who pay the agent's fees.  On the other hand, it's the sellers who have a contract with you and therefore they are the ones who are ultimately responsible.

At least that's what I have heard elsewhere.  Yes, the fees come from the same "pot", the buyers', but really they have no contract with the agent.

[meiklejohn]

Thanks

We did plan to wait another two years but interest rates being so low have pushed things on a bit

[Pickles]

[quote user="sweet 17"]I do understand that it's the buyers who pay the agent's fees.  On the other hand, it's the sellers who have a contract with you and therefore they are the ones who are ultimately responsible. At least that's what I have heard elsewhere.  Yes, the fees come from the same "pot", the buyers', but really they have no contract with the agent.[/quote]

Except that, if the sellers paid the agent's fees and inflated the price to reflect this, then the value used in calculating the taxes to be paid (what we think of as the notarial fees) would effectively be the price of the house PLUS the agent's fees, which would increase the tax payable. The system where the buyer pays the agent's fees is simply a way of reducing the notarial fees/taxes.

Regards

Pickles

[Judie]

[quote user="sweet 17"]

Judie, I wouldn't normally dare argue with you as you are the professional amongst us.

I do understand that it's the buyers who pay the agent's fees.  On the other hand, it's the sellers who have a contract with you and therefore they are the ones who are ultimately responsible.

At least that's what I have heard elsewhere.  Yes, the fees come from the same "pot", the buyers', but really they have no contract with the agent.

[/quote]

Sorry sweet 17, but our contracts clearly explain the net vendeur figure, which is the sale amount agreed with the seller, and that the property is presented FAI or frais d'agence inclus but that our fees are paid by the purchaser. We also do sometimes complete a mandat de recherche with purchasers.

[mint]

Ah, yes, thanks, all clear now.

Of course, the notaire's fees are on a scale and I can see that if you pay the agent's fees separately, as it were, then the net figure is less.

Next question then:  do the agent's fees include TVA of 19.6%?

I know that there are times when an agent would really smooth the process (and I have explained elsewhere how a seller pulled out on us and where an agent would have possibly progressed things a lot quicker) but I now also see the attraction of buying or selling privately.

But please don't take offence, Judie, I am continuing to view houses with agents and I am certain that a good agent could help to seal the deal.

Plus, of course, it's often easier to negotiate via an agent and an agent is in a better position than a buyer to talk some sense with the seller on matters regarding value, etc.

[Judie]

No offence taken sweet 17.

Yes TVA is included in our fees.

[meiklejohn]

An agent informed me recently that the if the buyer didn't pay agency fees, then yes the notaire fees would be more expensive. Based on a 100,000 property an extra 750 euro's would be due in taxes.

[mint]

Well, I never knew that!  It's an expensive business anyway and sometimes I think I prefer not to know these things [:D]

[meiklejohn]

Just to let you know

We have had a bid accepted on a house in Dept 33.

Agent fees were included in the price which obviously caused a problem for us.

Mentioned to the agent that we wouldn't be proceeding with deal unless the seller was paying for the fees.

Hey-ho this was changed without any problem.

Agent just asked the seller to sign a new mandate.

Notaire perfectly happy too.

[Panda]

Hello

Just to be clear did you therefore negotiate a 7%(ish) drop in the price  and so are now paying this much less for the house leaving you the money to pay the fees or did the net vendeur price change upwards by 7% to include the fees so that you could put them on a mortgage?  Example:

Was it orignally say 146k (net vendeur) plus 9k fees

Now 150k (net vendeur) but seller pays fees new mandat signed?

If the latter nothing changes except you pay more tax to the notaire as mentioned by Judith, if the former a 7% drop in this market is a snip, many houses are going for up to 30% under FAI price and nothing is selling so Im not surprised the venduer agreed.

Panda

 

[krusty]

This thread is interesting to me , as I am selling.

It seams like us v them , sellers v buyers.

I took the agents advice and priced it low , should I have insisted on a higher price to allow for the "knock down" which buyers like to do ?

[Will]

It's entirely up to you whether or not you accept or reject any offers received. You know the price you want - that's the price you should accept. Massive discounts only mean that the house was over-priced or that the seller is desperate.

Look at it another way. If your house is priced sensibly at, say, 200,000€ then it will appear far more attractive to buyers than another house in the same agent's book or website that is priced at 200,000€ but is really only worth 140,000€.

[P-D de Rouffignac]

I really do not understand all this argument about agency fees and who pays who and how much. If a vendor places a property with an agent to sell, at, say 100,000 euros and the agent says 'My commission for marketing it is 10%', in the event of a sale the vendor receives 100,000 minus 10% = 90,000 euros. End of story.

Yes of course the 10% is included in the price paid by the buyer, but then you can't walk into a shop and see a refrigerator for 300 euros and say 'But, ah, you only paid 200 euros to the wholesaler'.

The picture has got murky and confused because even the TV programmes talk about 'net vendor' prices, as though there is a market price for the property, onto which the agent's commission is then added. In reality, the correct market price of the property - i.e. the price at which is likely to sell compared to other similar properties on the market - is the 'net vendor' plus agency fee. To add the agency fee on top of the market price effectively kills the sale.

Finally, forget all the myths about bargains and beating vendors down in price - every Department in France is recording price rises in the first six months of 2010 (apart from four) with predicted rises of 6% durying the rest of the year. As Will has said, significant price reductions are usually the result of over-valuation, usually by the vendor, who eventually comes to his senses. This is another recurring theme of TV programmes such as 'Maison à Vendre'.

Finally, rejoice in the fact that your pound is currently - and maybe briefly - buying a lot more euros than it was a few weeks ago!

P-D de R.

[Sprogster]

Peter, the Century 21 survey is hardly independent as realtors have a vested interest in talking up the market and they are using a very small cross section of properties. Official figures issued in the Var show average prices down 20 per cent over the last year.

In my opinion there is a strong possibility of the market slowing down again in the second half of the year as banks in the eurozone tighten their lending as current euribor lending dries up.

[meiklejohn]

[quote user="Panda"]

Hello

Just to be clear did you therefore negotiate a 7%(ish) drop in the price  and so are now paying this much less for the house leaving you the money to pay the fees or did the net vendeur price change upwards by 7% to include the fees so that you could put them on a mortgage?  Example:

Was it orignally say 146k (net vendeur) plus 9k fees

Now 150k (net vendeur) but seller pays fees new mandat signed?

If the latter nothing changes except you pay more tax to the notaire as mentioned by Judith, if the former a 7% drop in this market is a snip, many houses are going for up to 30% under FAI price and nothing is selling so Im not surprised the venduer agreed.

Panda

 

[/quote] Panda Net vendeur price changed up the way so price I pay is still the same.

[meiklejohn]

[quote user="P-D de Rouffignac"]

I really do not understand all this argument about agency fees and who pays who and how much. If a vendor places a property with an agent to sell, at, say 100,000 euros and the agent says 'My commission for marketing it is 10%', in the event of a sale the vendor receives 100,000 minus 10% = 90,000 euros. End of story.

Yes of course the 10% is included in the price paid by the buyer, but then you can't walk into a shop and see a refrigerator for 300 euros and say 'But, ah, you only paid 200 euros to the wholesaler'.

The picture has got murky and confused because even the TV programmes talk about 'net vendor' prices, as though there is a market price for the property, onto which the agent's commission is then added. In reality, the correct market price of the property - i.e. the price at which is likely to sell compared to other similar properties on the market - is the 'net vendor' plus agency fee. To add the agency fee on top of the market price effectively kills the sale.

Finally, forget all the myths about bargains and beating vendors down in price - every Department in France is recording price rises in the first six months of 2010 (apart from four) with predicted rises of 6% durying the rest of the year. As Will has said, significant price reductions are usually the result of over-valuation, usually by the vendor, who eventually comes to his senses. This is another recurring theme of TV programmes such as 'Maison à Vendre'.

Finally, rejoice in the fact that your pound is currently - and maybe briefly - buying a lot more euros than it was a few weeks ago!

P-D de R.

[/quote] Do you mind me asking are you an Estate Agent? The bid we have had accepted was just over 30% below the asking price. While I was house hunting I heard many similar stories

[Swissie]

A friend is looking for a small place in France. She went to see a studio today- and I've just looked it up on French Google - and it is advertised there for E10.000 LESS. So is the agent trying to take her for a ride?

[P-D de Rouffignac]

Dear Meiklejohn - Hi. I worked for two years for one of the largest independent agencies in my region but now I am the French liaison for a company advising mainly non-French speaking clients on all aspects of property buying and settling in France. I try and keep a close watch on property trends and also am in almost daily contact with local estate agents and Notaires in the course of my work.

On the question of a property appearing at difference prices, it may be mandated by several agencies at different prices, the owner may have agreed to drop the price (this needs an 'avenant' attached to the oiriginal agents' mandate to make it legal) or the owner may have signed a 'mandat simple' allowing him/her to also try and market the property privately. This is permissible under French law but not necessarily the best way to sell a property. And it also raises doubts in the minds of potential buyers not familiar with the French system.

P-D de R.

[meiklejohn]

Just an update for anyone that's interested.

As mentioned previously, agent fees were sorted out. We're happy, seller's happy, Bank's happy and the agent is happy.

Currently in our mortgage 'cooling off period' and we will miss the completion day but the seller is OK with this and we should be owners of our new property in Dept 33 very soon!!