I’ve been thinking about property prices in the Aude quite a bit lately. At Aude France Property I work with three agents, each covering a different part of the Aude.
When I talk about prices I’m talking about listing prices, not selling prices. May not seem logical but listing prices are what everyone sees. It’s quite conceivable that as few as 10 people will ever see the selling price.
A couple of months ago I realized that prices in general were lower in one area than they were in the other two and that we were getting more enquiries for the area with lower prices than we were for the other two areas. Not a huge surprise really, especially if people don’t know the Aude.
Last week I had lunch with an immobilier – as a Canadian I’d say a broker rather than an agent – who runs an agency in the Corbieres. She reminded me that when prices rose rapidly 9 years ago it took the Corbieres a while to catch up. Prices there stayed low for about a year after they started rising in other parts of the Aude.
She said that it’s going to take a while for them to come down.
Another really interesting thing she told me helped explain why estate agents in France often give such unrealistic estimates for the listing price – something that artificially inflates the perceived value of real estate.
A lot of estate agents in France actually are paid a salary. Yes, you read that right – a salary! But…they have a quota. In order to keep their jobs they are required to bring in a certain number of new listings – mandates – per week (or month). Seems to me that if agents have to bring in a certain number of listings in order to keep their jobs they aren’t going to be concerned with realistic estimating, they’ll be motivated to say whatever will get them those mandates – including unrealistically high prices.
There are also quotas for visits, offers, and sales but that’s another post.
So why don’t their immobiliers discourage unrealistic pricing? According to my friend the immobilier it’s because the value of an agency is calculated – in part anyway – by the total amount of the mandates they have on their books.
Why would immobilers care about the value of their agencies? Because for the past 6 years there has been a buying spree with big ‘national’ agencies buying up ‘local’ independent agencies.
It reminds me of the funeral and cemetery business 20 years ago in North America. There were two companies buying funeral homes and cemeteries across the continent. Independents were literally lining up to sell. It was almost like dot com fever and the bubble burst at about the same time as the dot com bubble.
The immobilier buying spree has certainly slowed down a lot. Immolbiliers have closed quite a few offices. The market peaked here 4 years ago and many immobiliers were slow to realize it. Judging from some house prices some of them still haven’t realized.
So, back to property prices in the Aude.
There are quite a few independent estate agents in the Aude. They work through a broker but not in an agency office. No salary, just commission.
Most of them are in the Minervois. Listing prices are more realistic in the Minervois. Not many of them in the Razes. Listing prices are high in the Razes.
It makes it difficult for buyers and sellers. Sellers list at unrealistic prices and then have to keep lowering their prices. Houses can sit on the market for years. Sellers can end up accepting fire sale offers just to get the house sold.
Buyers with a budget of 200,000 euros might think of looking at properties listed at 250,000 euros but probably wouldn’t think of looking at anything listed at 300,000 euros.
In a slow market where houses are priced realistically – to sell – someone with 200,000 euros could expect to look at houses priced at 225,000 euros and to buy one of them after some negotiation.
As I write this I find that it’s raising more questions for me than it’s answering.
As a seller – what do you think? Would you rather list at a realistic price or list at a high price – on the off chance that someone will buy at that price – and have to keep reducing the price?
As a buyer – what do you think? Would you prefer to look at houses that seem out of your price range – on the off chance that a seller will accept a really low offer – or would youprefer to look at houses that you know you can afford?
I know what I think but I’d really like to hear from you.