Global French Flair
Privacy and Discretion are the Mainstays of Selling Properties in France
Open houses are a sight seldom seen in France. A few have tried to institute this walk-in method of property promotion, but so far, the market has not accepted the practice. The idea of having a slew of strangers stomping through their domiciles is not something French homeowners relish, even those desperately trying to unload their abodes. "Sellers are concerned about privacy," says Alexander Kraft of Sotheby’s International Realty. "Very often properties are marketed only with ‘price on request’ because sellers value discretion." Now chairman and CEO of Sotheby’s International Realty France-Monaco, Kraft began his career by studying law in Germany, England and the United States. Ten years ago, he joined Sotheby’s auction house in Beverly Hills, and from there he went to Sotheby’s International Realty where he became the assistant manager for the Western United States. A promotion to European regional manager and senior vice president came in 1999 in which capacity Kraft oversaw Sotheby’s International Realty’s network in Europe, Russia and the Middle East. "When Sotheby’s Realty was acquired by Cendant in 2004, I was offered the opportunity to acquire a substantial mass of franchises of my choosing," he explains. "I knew that France and Monaco were not only the most important but also the biggest and fastest-growing European luxury real estate markets. To date we have 12 franchise offices in France and one in Monaco. I expect to grow the network in the next four years to about 40 to 50 offices." Unlike the United States where professional brokers handle the majority of property sales, Kraft speculates that more than half the homes in France change hands privately. The country offers no multiple listing service. Instead of having a selling side and a buying side, French brokers generally show only their own inventory, rarely cooperating with their counterparts. As a result, brokerages tend to be small offices run by professionals who do most transactions themselves. Unlike American mega-companies that may support hundreds of agents, large French firms usually have a maximum of 20 to 50 brokers. Brokerage commissions, customarily paid by the seller, fall in the 4 to 6 percent range, but can be negotiated as high as 9 percent or more. Buyers pay notary fees of about 3 percent and a title registration fee of about 6 percent. The buyer also pays a 7.5 percent property transfer tax. Kraft suggests homeownership in France is not as popular and widespread as it is in the United States, partly due to historic precedence. In the past, noble landowners controlled vast acreages, while law, tradition and finances often barred commoners from acquiring property. Although times have changed, homeownership still fails to carry the cachet it does in the United States. Instead of being owner friendly, the French economic environment tends to favor renters. The ratio between income and property price makes housing relatively expensive for the middle class, and the government offers neither subsidized home loans nor significant income tax breaks. In spite of that, the French real estate market is strong. Echoing American cycles, values rose in the late ’80s and crashed in the early ’90s. They have been making a beefy recovery over the past half-decade. "In Paris and on the Côte d’Azur, prices have more than doubled over the past five years," says Kraft. "Just as in the States, everybody’s asking if that’s a bubble and if it’s likely to end." Fortunately for Kraft and his Sotheby’s agencies, much of the French real estate resurgence has been in the luxury market. Just as it is on this side of the Atlantic, a well-heeled cadre of successful entrepreneurs, executives and celebrities are buying country retreats to serve as getaway alternatives to crowded city living. "They want absolute privacy, absolute freedom and to be absolutely out of the public view," explains Kraft. And when the time comes to sell that property, it’s doubtful they will opt to show it off with an open house.
Source Reference:
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