Spotlight: Buying an apartment in Paris, from the eyes of a buyer’s agency
Miranda Bothe discusses how life brought her to Paris, the vision behind the company she founded to help international buyers find property in Paris, and the ins and outs of investing in Paris real estate.
When did you start your business in Paris and why?
My husband and I moved to Paris in 2003, and soon after started looking for our own apartment to buy in the city. It took us nearly a year of combing listings, visiting useless properties, and a lot of misleading information and visits with numerous real estate agents and with owners selling their properties directly, before we found the great apartment we were looking for. The process felt all wrong: without an MLS, the market is disorganized and often dishonest, with inconsistent information and incomplete listings. We made dozens of property visits that lasted only minutes, just long enough to confirm that the listing description was way off and the apartment was not at all what we wanted.
The closing process was similarly confusing: unfamiliar laws and procedures, wordy documents in French legalese, building regulations dating back decades that importantly define your rights and obligations as a co-owner… All these overwhelming challenges, and I am a US attorney and we both speak French!
I decided that what the Paris market needed was honest, straightforward buyer’s real estate services, targeted specifically at the international community who otherwise suffer the added challenge of not speaking the language. Paris Property Group was born of that vision. We bring an MLS approach to real estate buyers in Paris, representing their interests in the market to bring them all the available properties, screening and previsiting properties on their behalf, so that they can see only the ones that match their search criteria the best. For the closing process, we have sourced the best resources for our clients, from legal and financial advisors who ensure that the purchase structure is best suited to their needs, to renovation and decoration experts who realize the buyer’s vision for the property. Our buyer services quickly expanded to representing properties for sale, as word spread of our service approach and sellers too wanted to find a more dynamic and comprehensive strategy for marketing their properties. And so came about Paris Property Group.
Is there a real estate licensing process in Paris? Is it similar to ours in the US?
There is a very strict licensing approach in fact. Real estate brokers must obtain a carte de transaction immobiliere from the Paris Prefecture in order to represent buyers or sellers in the Paris real estate market. Applicants must have either worked a number of years in real estate, or have a relevant degree in finance or law to be eligible for the license. The broker can then license agents to work on under their comprehensive license. Unfortunately, many of the “buyer’s agents” Paris who market their search services to the international community are not licensed, or legal, in France. A number of buyers have had disappointing forays into the Paris real estate market with these unlicensed entities, who often require huge balloon payments upfront for the search, take additional fees through the selling agent on top of the fees they demand from their clients, or sell to international clients at inflated prices that the French-speaking community would scoff at. We unfortunately find ourselves having to undo a lot of the damage done, in particular deals as well as more generally for the reputation of licensed buyer agents in Paris.
What is the average price of a 1 bedroom? A 2 bedroom? (Or is it possible to determine that given there’s no MLS?)
The average price of an apartment Paris-wide is a bit of a meaningless number, given the vast difference in price depending on the location, features and condition of the apartment. That’s probably true anywhere, but in Paris more than others: it’s a small, dense city encircled by the highway that runs around it (the peripherique) that cannot organically expand as other cities can (London, New York, San Francisco) to encompass new neighborhoods as old ones rise in price. Within the city walls then, property further out from the center can be as much as 8-10 times less expensive than the most coveted properties in the city center.
What’s more, Paris property is valued not so much on number of bedrooms as on square meter size (1 m2 = 10.76 square feet). How the property is measured is strictly determined by law (the loi carrez) so that sizes remain consistent from one property to the next. Layout of an apartment is important of course, but ultimately it’s the square meter size, and the going rates from one neighborhood to the next, that will determine the price.
Two neighborhoods of particular interest to international buyers are the Marais (3rd/4th arrondissements, on the right bank) and Saint Germain des Pres (6th/7th arrondissements, on the left bank). A fantastic, renovated apartment with good features (a view, a high floor, an elevator) will run upwards of 13,000 euros/m2 in the Marais, upwards of 18,000 euros/m2 in Saint Germain (the record last year was 50,000 euros/m2. In these same neighborhoods, a less spectacular apartment or building, or one requiring substantial renovation can be had for up to 30% less than that.
How do you determine list price?
We take a comprehensive look at recent sale figures and current listings, as well as trends in the particular neighborhood, street and even building we are evaluating. We also give a lot of thought to how and to whom we will market the property: is it more suitable for an international clientele, a family moving to Paris, or the artist community? Finally, on property sales we create our own Paris MLS: we work on an exclusive contract with the seller, but then actively promote and share the listing with other agents to ensure that we are accessing the widest possible pool of interested buyers. We often consult with trusted colleagues in determining the right list price, to suss out what their recent sales experiences have been and what buyer interest they may already have for the property. Once we take the listing, we have a full marketing strategy in place to maximize the value for the seller in a time frame that best suits their interests.
Are you clients mostly English speakers? Are you fluent in French plus additional languages?
Historically our clients were primarily English-speaking clients, from the US, Canada, UK, Australia. Often they are French expats living in these countries, who appreciate a level of service that they have become accustomed to abroad and find otherwise lacking in the Paris real estate market. We have recently started to work with more clients from elsewhere in Europe, the Middle East and China, as investors from these markets have more and more come to appreciate the long-term value that Paris real estate offers. Besides English and French, our team speaks German, Italian, Russian and Hebrew.
How long does a real estate transaction take from start to finish? It’s usually 2 to 3 months on but is it more commonly 2 or 3? What causes delays? The same as in the US: financing? Or bureaucracy?
The period between the signing of the preliminary sales agreement (the promesse de vente) to the signing of the final version (the acte de vente) varies depending on a number of factors: whether the buyer is seeking financing, whether there are conditional clauses on the sale that have to be satisfied prior to closing. During that period, the notaire overseeing the purchase on behalf of a buyer (a specialized lawyer who oversees real estate transactions, wills and estates and other formal transactions in France) will check the title and encumbrances on the property and other formalities. Among these, certain neighborhoods in Paris are subject to a right of first refusal by the city to intervene in the purchase in the place of the buyer; the process of verifying that the local city office declines that right can take up to a month. When the buyer is out of the country, there is often a delay in getting documents notarized at a French consulate abroad. What’s more, buying through a Societe Civile Immobiliere – a French company structure designed specifically for owning real estate by 2+ persons – is often beneficial for non-resident clients looking to avoid the strict forced inheritance laws that apply to all property owned in France.
All this to say: as an international buyer, unless there is a specific time pressure to close quickly (for the buyer or the seller), the best is to plan on a 3-month maximum which can be shortened toward the end if the extra time is not needed.
This interview was adapted from its original version on the Washington DC-based blog, Concrete Jungle DC.