How do you know whether the property you are buying is valued properly? In this section we will try to help you determine a 'correct' value for the property you laid your eyes on.
External value estimations
Often you will receive a free estimation of the value, the "estimation gratuite" or "avis de valeur". These are often rather superficial estimations. Therefore it might be helpfull to request an additional (neutral) value estimation made by a certified expert. Especialy when your realtor represents the seller, or if the report was not composed by a certified expert, you might want to add some question marks with regards to the neutrality and validity of these free estimations.
If you are making use of the services of an intermediary or realtor that represents you as the buyer, they most certainly will be able to help you out.
Note that if you want to incorporate a mortgage in the sales deed, you will need to have a neutral taxation report by law.
How can I estimate the value myself?
Even though you are not an expert, you want to have some basis to compare the listing price with. Let us give you some indications towards where you can find a good basis. We will make the distinction between the land (in case you want to build yourself), the property (land + building) and the transaction costs.
1. Value of land
In France, land constitutes about 33% of the total cost of a property (2010). To determine the price of land, you can check out a few sources. You can check out the land register to see what prices pieces of land are sold for in the same area. You can also find an indication for each department on the website of terrain-construction.
It is important to keep in mind that there a lot of factors that can have a big impact on these prices. For example, if your piece of land has a stunning view or lays next to a forest, the price per square meter will be higher for your land. Depending on the sources we found online, these price differences typically go anywhere between 30% to 60% of the land price.
Another key factor to be aware of, is the intended use of land that neighbours the plot you want to buy. You might have a stunning view now, but maybe the farm land accross the road has been reassigned to be used for industry. Or maybe the owner of the plot downhill is planning to construct an enormous skyscraper that not only will block your view on the valley, it might cast a shadow on your plot to! This type of licenses and permits are typically checked by the notary during the sale. However, you can always do some research in advance by checking the "Plan Local d’Urbanisme" or PLU at the town hall.
2. Value of the property
For properties as a whole (including the building), it never hurts to check out the neighbours. Try to find recently sold properties that are nearby similar to the one you want to buy. You can find information on the website of French notaries. If you double click on the regions, you can go as detailled as the districts to see the average prices per m².
If you are looking towards other properties that are still on sale, keep in mind that they might eventually be sold for a much lower price. If a property has only been listed recently, prices might go down over time or after negotiations. For properties that have been on the market for a while, prices might be set too high too.
For older buildings, make sure to include the DDT report or any other defects of the property into your calculation!
3. Transaction costs
Since it is possible that the real estate agency's fee is not included in the listing price, it is important to take these costs in consideration too. You have to know whether these costs are included, often referred to as "commission comprise" or C/C. This means that the listing price includes the real estate agent's fee is included.
If you look at the total transaction costs (including the notary fees and realtor's commission), you should take into account a mere 12% to 16% (for higher listing prices, you will pay a lower percentage in fees).