The Paris Real Estate Runaround - Part II
By Alan Kahan

You found it! That Paris dream apartment you've always wanted! You've seen it twice. You measured the windows, and yes! Aunt Tilda's drapes will fit! You've made sure there are at least 3 bakeries within a 5 minute walk. This is crucial. You should never even consider buying a Paris apartment without the 3 bakeries. You see, bakery A will be great but closed on Tuesdays, bakery B is open Tuesdays but burns their baguettes, so you must have bakery C, not quite as good as bakery A but open Tuesdays and producing an almost equally good loaf of bread. If there were only two bakeries in a 5 minute walk, you might be stuck with burned baguettes on Tuesdays, and that would not do, not in Paris. Mon Dieu! What were you thinking? So you need at least three, including one to despise along with its ignorant customers. Your new building also has at least a little of the stonework that screams This is Paris! at your visitors. Oh yes, you are going to have a lot of houseguests - for the rest of your life. All those people who never found the time to visit you in Cedar Rapids will manage a trip to Paris, and they're all going to assume you'd love to have them around for a week. Or two. But that's another subject. You haven't bought the place yet.

Time to call the agent and say you want to make an offer. He or she is delighted, naturally, and invites you to come around to the agency so you can write it up together. This being France, if it is not on paper it does not exist. The first question, of course, is how much to offer? In the US, if you want to know what a place is really worth, you can usually look up online government records that show sales prices. Not in France. Lots of websites will give you the average price per sq. meter for a given Paris arrondisement, but this is about as useful as knowing the average prices for apartments in Manhattan. Manhattan includes Harlem. You need more specialized knowledge to make an intelligent bid. You can get it, but you'll have to pay a few euros. A few websites, notably lacoteimmo.com, will give you sales prices within a few hundred meters of your new address for a small fee. The Paris rule of thumb: In an average market, if the apt has a reasonable asking price, aim to end up paying 6% less. Why 6%? We'll get to that.

Once you've figured out the price you'll offer, you tell the agent - who immediately wants to know why you are offering such a low figure. He demands your reasons - and he actually expects to get them. "What I think the apartment is worth," is not acceptable. You see, the agent and owner expect you to provide a list of specific justifications for the insultingly low bid you are making. So you'd better be prepared to tell them. The agent will actually listen and write them up. Another agent is going to see the owner and use this list to make the case for your bid. As in, "look, this stupid foreigner thinks she can buy your lovely apartment for this trifling amount! Shall I just laugh in her face, or do you want to make a counter-offer?" The latter is more likely if you have presented some acceptable reasons. For example, the fact that her apartment only gets sunlight on leapdays in June. Or because her asking price does not reflect the proper discount for an apartment on the fifth floor of a building without an elevator (there are a lot of those), and thus has not sold for 6 months. Another rule of thumb: In Paris, if an apartment hasn't sold in 3 months, agents typically demand that the owner lower the asking price. The owner either complies, or gets another agent, or both. About 50/50. Bear this in mind when you ask how long an apartment has been on the market. The agent will respond with a time that represents how long HIS agency has been selling the apartment - rarely more than 3 months. Make sure you ask if it was on the market before! Of course, the answer may not be entirely truthful.

But this is only the beginning of filling out the offer sheet. Next there is the amount of cash deposit you are willing to put down shortly after the offer is accepted. Forget 0. I've heard of people offering to pay the asking price with 0 down - and getting refused. Also forget some traditional round number like 10,000 euros. This is a country that respects cash - and won't respect you if you don't have any. How much cash for the deposit? 3 agents told us three different stories: "At least 10%!@ A10%@, Aoh, 5% is plenty once the price gets over 300,000 euros." Actually, the law sets a maximum of 10% for the deposit due on signing the contract. Can you get away with less? It depends on the agency, and the owner. This IS negotiable. Sometimes. Not with the agency from whom we bought our apartment, however.

The agency offer form will also include, as a matter of course, another number you should be prepared to challenge - how long the offer is good for. In the US, a couple of days is standard. Many agencies here will try to get you to sign on for 2 weeks, during which they will go on trying to get another buyer. It is perfectly acceptable to limit it to 5-7 days, and the agency cannot prevent you from doing so.

And then there is the clause suspensive. VERY important. It says that if you cannot get a mortgage you don't have to buy the place and you get your deposit money back. If you need a mortgage, make SURE this is on the offer sheet - if it is not, you are legally committed. If you don't need a mortgage, cut your asking price a little. Cash talks.

Well, you made the offer. It was, of course, refused. But after a little more negotiating, you've agreed on a price. How much was it? If you have done things right, and the market is not too hot, it is 6% off the asking price. You see, 6% represents the frais de notaire, the Anotary expenses. These are set by law, as a percentage of the price, and are mostly taxes. There are websites that will calculate them for you, and in Paris, on any apartment bigger than a small studio, they will be about 6%. If you get 6% off this means the seller has effectively paid the taxes, not you. Since all French people understand perfectly the concept of not paying taxes, they will understand your desire not to pay them. Therefore they can accept a discount of up to 6% without any loss of self-respect. Of course, they'd rather YOU pay the taxes, but if that is not to be, they'll just give one of those cute Gallic shrugs.

Ah! Now you call all your friends and tell them your new address! Wait a minute, remember that deposit? You have it in the bank? A FRENCH bank? In euros? If not, you've got some work to do. "But it's easy to wire money internationally these days, isn't it?" No, it is not. Most American banks will not do wires overseas. Others will, but only into an account in the same name, which may not be what you want to do. Others will, but if you cannot come into the bank in person (but I'm in Paris buying this apartment, dammit!), it will take them three weeks to do the paperwork - and your deposit is due in two. Prepare to sweat and go up the chain of command.

Also, if you want to save 1-2% on the exchange rate compared to the banks, check out the various British brokers that specialize in moving money for individuals - but this will add a couple of days to the process. We used currenciesdirect.com, and they were very competent.

Then, if you're married, and if you got married outside France, and especially if you're married with children, make an appointment to see an Anotaire. You need a marriage contract before you buy this apartment, and in France this is done by the Anotaire. I don't care if you've been married 20 years, you need one. Blame it on Napoleon. Corsican bandit that he was, he thought blood was thicker than water. Property was meant to stay in the bloodline. French law, little changed in this respect despite Waterloo, agrees. Real estate goes to the kids if you die, not to your spouse, and your will is irrelevant. Your surviving spouse gets to use the 50% the kids don't own until death, but can't sell it without the kids' consent, and 50% of the proceeds belong to the kids. If this is not your ideal situation, the only way to change is by signing a special kind of marriage contract that means the spouse gets 100% ownership. It means other things too, so talk to the notary about it. You'll need this contract signed before the closing.

Ah, the closing. That will have to wait for the next installment.

Expat Professor Alan Kahan, Sarah Bentley, and their children fulfilled their dreams by leaving the US for Paris .. and never looked back.

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