[mattyb]

We've been looking at houses for a few months and have finally found something that we like. Basically here in France, you pay the asking price + 7% which goes towards taxes. Agency fees are included in the asking price. AFAIK, there are no other fees or outlays.

The house that we like was for sale at 410,000 in September of last year. At the end of Sept they've dropped it to 400,000. Then in the beginning of Dec it went down to 385,000 which its at now. So, they're finding it hard to sell.

OK, the house is perfect for us, no need to do any work, the house was built in 2007 (finished in 2008), nice area blah blah etc etc.

How much do you reckon I should offer? Do you go down by 10%? 5%? I'm tempted to try 360,000 and arguing with the agency to drop their fees. What does the Lounge say?

[finboy]

From experience, it's best to start low unless this is the PERFECT house. The only risk of bidding low is that you'll upset the sellers and they might not want to deal with you. This is much less likely in a really sour market.

Otherwise, it can never hurt to start low in a down market. But you must be willing to walk away, you can't want the deal too much. They must BELIEVE that you'll walk away, that's the most important. Sometimes just telling your broker that you'll walk away is enough to send the message. It pays to have your broker looking at OTHER homes as well.

Remember, your agency/broker isn't really working for YOU, they work for themselves and the profession. They are compensated on the volume of houses they sell, so it pays to keep your cards close sometimes, especially if you don't know them very well.

[Phileas]

How does it work in France? Do both seller and buyer work with a realtor?

If a house has already dropped repeatedly, then the seller might be at a point where they just won't take any further losses. Having said that, coming in with a bit of a lowball, that isn't insulting, has never hurt me.

I'd get my realtor to prepare a list of comparable sales in the neighbourhood, then use that as a guide. As far as an agency dropping their fee, that will never happen. The agency will always get paid, that's the way it works. They're a business, not a charity.

[Eug]

Yeah, if it's reasonable for the area, bid low, but not too low. If too low they either may think you're not serious, or else they could get insulted. Either way they may just blow you off. Dunno what it is in France, but often in North America an insulting low ball offer is something that is more than ~10% below the fair market price. A reasonable place to start would be somewhere between 5-9% below comparables IMO, unless it's a sellers' market.

However, if the house is still overpriced, bidding low might actually fair market price. You have to know what comparables are in the area. If $385000 truly is reasonable, then maybe $360000 would be a good place to start if there aren't others looking to bid on the house.

To give you a personal example...

When I bought my house in 2007, I thought it was listed for close to a reasonable market price, although some may have argued it was 2-3 percent high, depending on who you talk to. I bid at just over 6% below asking... and it was accepted. Now I wonder if I should have bid 9% below asking. A few caveats that probably made my offer more enticing though was that 1) The house had been on the market for several weeks already, 2) I was willing to provide a large deposit, and 3) I wouldn't have a clause making the sale contingent on selling my existing condo. (Around here, that's often the case, so if you don't sell your place, that purchase falls through.) Sometimes, having a serious buyer with strong finances and not too many restrictions on the sale is a lot more attractive than a couple of extra percent of $ for sale.

[Phileas]

Absolutely. A large deposit and strong financing are always welcome.

[mattyb]

The agencies around here have been known to drop their fees, if the owner also accepts a drop - thereby splitting the lower asking price and not hitting just the home owner or agency (broker/realtor). I know that they'll get paid. The house is for sale under 3 agencies, there is no exclusivity. The price is the same for the 3 agencies but only one has shown that the price was previously higher.

I've got a large deposit, the finance side isn't an issue (I could buy the house for the asking price). However, in the area that the house is, there are others that are cheaper for the same size. They aren't as recent though.

Since we've been looking for a few months, we've seen the same houses drop in price. Its just knowing how much lower the owners may go. If we offered 360 and they refused, I'd probably goto 370. If they refused that then I'd walk away.

[Eug]

You're in a good situation then. I'd guess that in your shoes I'd probably bid around $360-365... assuming it's actually worth around $385 (because it's more modern).

[Laminar]

I just bought a house (on contract, close next month). It was being marketed poorly, the pictures were bad and taken pre-repainting. It sat on the market for about nine months. We got it for $40,000 under assessed value, $60,000 less than what it sold for two years ago.

We got the seller to pay for a home warranty and cover closing costs (about $5000 for both). We spent two weeks haggling back and forth but we got our price.

[Shaddim]

Originally Posted by Eug 

Yeah, if it's reasonable for the area, bid low, but not too low. If too low they either may think you're not serious, or else they could get insulted. Either way they may just blow you off. Dunno what it is in France, but often in North America an insulting low ball offer is something that is more than ~10% below the fair market price. A reasonable place to start would be somewhere between 5-9% below comparables IMO, unless it's a sellers' market.

Some of my best deals have been from extreme low-balling, offering 20% or more off the asking price. Just say, "I see you're asking $150k. Today I'll give you $120k in cash. No waiting, no strings." I've not had anyone get pissed, they usually either politely turn it down or make a counter offer.

mattyb, this may not be possible, but if you can secure the funds in advance by some other means and walk in with a checkbook, you'd be surprised at how low some sellers and agents will go right now. It may be different over there, but here it's an almost total buyers' market.

[Phileas]

That can work, for sure. OTOH, we had somebody walk away from a lowball offer we made (cash too), who then refused to even look at an improved offer. It was for a weekend home, so it didn't matter all that much, but still.

I've also refused to make any further deals with lowball offers on a property I was selling.

It can work both ways. I didn't know that agencies in France would split losses. How many points do they make on a sale?

[mattyb]

Originally Posted by Laminar 

I just bought a house (on contract, close next month). It was being marketed poorly, the pictures were bad and taken pre-repainting. It sat on the market for about nine months. We got it for $40,000 under assessed value, $60,000 less than what it sold for two years ago.

We got the seller to pay for a home warranty and cover closing costs (about $5000 for both). We spent two weeks haggling back and forth but we got our price.

I don't mean to be impolite, but what sort of percentages are we talking? Since the house was built in 2007/2008 then we'll be covered by the builders' 10 year guarantee (a French requirement) which is good if we find any structural problems, then its covered.

Originally Posted by Shaddim 

Some of my best deals have been from extreme low-balling, offering 20% or more off the asking price. Just say, "I see you're asking $150k. Today I'll give you $120k in cash. No waiting, no strings." I've not had anyone get pissed, they usually either politely turn it down or make a counter offer.

mattyb, this may not be possible, but if you can secure the funds in advance by some other means and walk in with a checkbook, you'd be surprised at how low some sellers and agents will go right now. It may be different over there, but here it's an almost total buyers' market.

IIUC, in France when you get a mortgage for a house the money that you get from the bank never touches your account, it goes directly to the seller. But I may be wrong, I'll look into it. I've never bought a house before so not sure what the process is.

I keep thinking that with the property being on the market for 6 months, they may just want to get rid of it ASAP. We'll be re-visiting it tonight and getting all the papers for the offer which should happen on Monday.

Cheers for the advice guys.

[mattyb]

Originally Posted by Phileas 

It can work both ways. I didn't know that agencies in France would split losses. How many points do they make on a sale?

I really have no idea. A family member recently bought a house. He said that he offered 30,000 less (which wasn't 10% of the asking price). He said that the agency reduced their fees so that the seller didn't have to take the full reduction. This was in a different town to where I live, but I presume that all agencies have this leeway.

[mattyb]

I've just done a search and apparently they have to display the 'frais' or fees. IIUC, its like income tax, up to 150,000 its X, from 150,001 to 300,000 its Y etc etc. I'll have a look tonight.

[Eug]

Originally Posted by Shaddim 

Some of my best deals have been from extreme low-balling, offering 20% or more off the asking price. Just say, "I see you're asking $150k. Today I'll give you $120k in cash. No waiting, no strings." I've not had anyone get pissed, they usually either politely turn it down or make a counter offer.

Yeah of course that can work, but in your case, was the asking price actually reasonable? I've seen too many places that were listed 10% too high to begin with.

For example, one place I looked at was 15% higher than the asking price of the house I bought, yet was a smaller house with several issues. It did have a bigger lot, but that didn't justify the added cost.

I didn't bother bidding because I didn't like the house, but if I had, it would probably have to have been at say 20-25% below asking. Suffice it to say that that house didn't sell.

[Shaddim]

It depends, you have to do your research on the values in the area, and usually I won't even approach a property unless the asking is at least a little below the current market. There's no rush for me, I just look and see what's out there and then go fishing. Sometimes they bite, most of the time they don't.

[Eug]

Originally Posted by Shaddim 

It depends, you have to do your research on the values in the area, and usually I won't even approach a property unless the asking is at least a little below the current market. There's no rush for me, I just look and see what's out there and then go fishing. Sometimes they bite, most of the time they don't.

Yeah, fishing is good. I'd probably do the same, except I don't invest in the real estate market.

[mattyb]

I didn't get to find out what the agencies fees were, but he let slip that they're willing to negotiate. I'll also never see the money from the bank loan, it goes straight to a notaire (notary) who is basically the man in the middle between me and the seller money wise.

Pretty sure that we'll offer 360.

[Phileas]

Good luck with it all. Post some pictures when you've got some time.

[Athens]

wow 385k for a 4 year old house, I hate you lol. That gets you at best a 750sq foot Condo here. A 35 year old smaller house goes for $600 000 easy.

[gperks]

No idea about the bidding, but if you can at all afford it, just say no to a 30-year mortgage. Get a 15 if you can. A 30-year just involves you paying the bank. Average time in a house = 7 years. 7 years into a 30-year... you've been paying nearly all interest. 7 years into a 15 and you'll have accumulated a decent bit of capital. Staying longer than the average? At 15 years you're done, vs only half way through.

[Laminar]

Originally Posted by mattyb 

I don't mean to be impolite, but what sort of percentages are we talking? Since the house was built in 2007/2008 then we'll be covered by the builders' 10 year guarantee (a French requirement) which is good if we find any structural problems, then its covered.

Final purchase price was $236,500. House was built in '02, has about 2800 finished sq. ft., a three car garage, and a decent yard. I'd been holding out for a four car garage but couldn't pass up this deal.

[Eug]

Originally Posted by Athens 

wow 385k for a 4 year old house, I hate you lol. That gets you at best a 750sq foot Condo here. A 35 year old smaller house goes for $600 000 easy.

Isn't he talking €?

€385000 would be over US$535000

[Doofy]

The house I'm in at the moment was had for 15% below asking.
Had a looky, waited six months, then walked in with the type of deal Shad is talking about (no waiting, no chain, no messing).

Depends what the overall economic situation is like in France, Matty. 360 is the tops. You could try 340 or 350 and work up from there.

[Laminar]

Originally Posted by Doofy 

The house I'm in at the moment was had for 15% below asking.
Had a looky, waited six months, then walked in with the type of deal Shad is talking about (no waiting, no chain, no messing).

Depends what the overall economic situation is like in France, Matty. 360 is the tops. You could try 340 or 350 and work up from there.

I have a coworker that just bought a retirement condo in California. He's spent the last year making offers ~$50,000 below asking price and after about 20 of them, somebody bit. Now he just has to come up with the $70,000 he told them he had for the down payment.

[Phileas]

The house we're currently in went on the market about 20% lower than it should have. The combination of an out of town realtor who didn't understand the neighbourhood and a somewhat clueless seller. A local realtor would have set a date to submit sealed offers, these guys were taking offers from day one.

Our realtor is an old friend of ours, she got us in the evening before the day the house was officially opened for viewings and we bought it there and then.

[mattyb]

The house has 4 bedrooms and an office, as well as a decent lounge, kitchen and a garage. Its 127m2 (thats about 1400 sq ft according to Google). There is a 1000m2 garden (11,000 sq ft) which is basically empty - no trees.

We like it alot, only shortcoming is the trip that my wife will have to make to the tube station will be about 15 mins longer. My work travel time should go down a bit. Like I said, we've been looking for ages and haven't found anything that we like that was as new, had a decent garden and of course was in our budget. Daughter (7) likes it as well but doesn't want to change school.

[Doofy]

Sounds nice...
But seems a bit steep for France, especially considering an eight-bed mansion on four acres in the Corrèze is only £50k ish. I guess you're paying for "easy commute" location, no?

[mattyb]

Originally Posted by Doofy 

Sounds nice...
But seems a bit steep for France, especially considering an eight-bed mansion on four acres in the Corrèze is only £50k ish. I guess you're paying for "easy commute" location, no?

There are no jobs in the Corrèze, except pandering to Bernadette Chirac or François Hollande. I could get a 250m2 farmhouse with 4 or 5 hectares (1 hectare = 2.5 acres) for about the same price as the house that we like. But I've been spoiled by being close to work and a decent sized town.

I don't like spending a hour in the car before work. In the new house I'll be 6.5km (4 miles) door to door. I doubt that it'll take 20 mins.

[Phileas]

Nice. That's pretty much exactly my commute, takes me between 10 and 15 minutes, depending on traffic. In summer, I just take the bike, or even walk if the mood strikes me.

[mattyb]

I used to think that being an hour or more away from work was OK. Since my kids are still young, its pretty good being close.

[mattyb]

Last week we offered 355 000€ (total cost to us nearly 380 000€). A day later they came back with 374 000 (total 400 000€). On Tuesday we said 360 000€ (total 385 000€). The agency said that they wouldn't accept and we waited a few days. Had a call last night that they accepted 360 000€.

So from 412 000€ (total 440 000€) in September 2010 we've got them down to 360 000€. We'll start the paperwork tomorrow.

[The Final Dakar]

Congratulations.

[ShortcutToMoncton]

Great stuff.

Got a small house myself little over a month ago - it's about a hundred years old though, so should be some fun renovations ahead! Agreed that cutting down the commute time is completely awesome - I'm about 1900 feet away from the office right now, which is absolutely stellar.

[Shaddim]

Originally Posted by mattyb 

Last week we offered 355 000€ (total cost to us nearly 380 000€). A day later they came back with 374 000 (total 400 000€). On Tuesday we said 360 000€ (total 385 000€). The agency said that they wouldn't accept and we waited a few days. Had a call last night that they accepted 360 000€.

So from 412 000€ (total 440 000€) in September 2010 we've got them down to 360 000€. We'll start the paperwork tomorrow.

Well done! You'll probably always like the house, but now you'll smile in satisfaction knowing what you paid for it.

[mattyb]

We signed the official offer papers today. The agency (who gets money from the seller) said that their fees are usually 15000€ for that price range, and they went to 10000€ to split the difference with the seller. He seems genuine enough but I never trust house sellers, no matter the continent.

I won't know if I over paid until I try to sell it, but we drove past it after the signing and the wife and daughter are already talking about the trees that we'll plant. Still scary the amount of money involved, and the duration of the loan (20 years). If everything goes as planned, we'll be in for August.

I appreciate the advice guys and gals, cheers.

[Wiskedjak]

late advice, but I usually ignore the asking price. Determine what you believe the current market value of the house to be (it might be close to what they're asking, but it might not) and then offer 10% below *that*.

nicely done on getting the price you wanted.

[-Q-]

Congratulations!

[Phileas]

If this is your 'forever home', as in it'll be the place where you'll raise your family for the next 20 or 30 years, then the purchase price won't matter much anyway.

[Laminar]

[mattyb]

Laminar's house looks like shit/full of boxes, but thats OK, the garage is sorted!!!

My garage isn't near as big, and it'll never see a car in it.

Paperwork slowly getting signed.

[ghporter]

We had to move a huge amount of slowly collected junk out of two spare bedrooms when we had our flooring redone in February, and I really miss being able to park both cars in the garage. That's a very strong motivator for my wife and me to work hard at sorting through the junk and get rid of most of it. We're working a box at a time. The hardest parts are boxes of books and boxes of letters and other mementos collected over 30 years... But having the house MUCH more liveable with the removal of old, allergen-collecting carpeting and replacing it with tile and hardwood has been marvelous. This is our "forever" home, and it's really feeling more like what we really wanted to start with because we took control and made these changes. Changes which were spurred by one little plumbing leak that ruined the carpet in one room... (And I am still not done with repairing the wall the leak borked up, but I'm well along the way...)

Next comes painting, first inside, then outside! Mattyb, you're going to really enjoy the house, but keep in mind that it is also a hobby and a chore. Organization and planning will help keep it from being a task master too.

[mattyb]

Organi-what ?!?!

The home improvement, d-i-y skills need developing. Is there an app for that?

[Laminar]

Originally Posted by mattyb 

Laminar's house looks like shit/full of boxes, but thats OK, the garage is sorted!!!

Well, the motorcycles are covering up the fact that 1.5 stalls are completely filled with stuff that needs to be unpacked. Need to fix that today.

[Phileas]

Our garage is a barn with a gravel floor. Until recently the cats and racoons were using it as a nightly meeting point, but I put a stop to that by rebuilding one side and plugging the holes. Amazing how gravel mixed with quickset cement will stop the critters from digging.

Still not the best place to store anything of value.

[andi*pandi]

garage? garage? pfft.


(I wish we had a garage)

[Eug]

This is our garage:

Click to enlarge

Yeah it's a pain because it means we have to park our car outside in the winter, but I'm willing to put up with it.

[Laminar]

[mattyb]

Don't fook around do you Lam? Sleep much?

[Laminar]

Nope. Wife told me this weekend if she met me while working with me she wouldn't have married me, as she'd never actually seen me in, "Get Shit Done" mode before. I suggested she unpack the office while I'm gone this week, as it's the only thing I haven't unpacked. We'll see if it happens.

[The Final Dakar]

You can crash at my place while the divorce goes through.