Estate agents have defended their commission rates after France’s national competition regulator criticised their fees, which are higher than the European average.
The average fee in 2022 was 5.78% including taxes, or €12,463, according to the Autorité de la concurrence, an advisory body to the government.
Fees varied, depending on the property value, from as much as 9.5% for the cheapest 10% of homes to 3.8% for the most expensive 10%.
In 2018, French fees were, on average, 5.2% without tax (6.5% with tax) while the EU average was 3.3%, said the regulator, using European Commission data.
Read more: France’s sky-high estate agent fees: What reform is being proposed?
‘France not comparable to other countries’
The authority recommended that action should be taken to lower rates towards the EU average to boost purchasing power – for example, by making the rules on practising estate agency more flexible.
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However, Eric Allouche, CEO of the ERA Immobilier France network, said comparisons with other countries are “like comparing apples and oranges”.
“Here we take care of everything, from the start to the end, and it’s forbidden to charge any extras. If you added all these services up one by one, it would be enormous – and with a total lack of any guarantee of being paid,” he said.
“Assume a buyer can’t get a mortgage in the end. We have organised visits, negotiated, advertised, drawn up a pre-sale contract, assembled all the documents, and get nothing at the end of it.”
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Advertising alone can cost €1,000/month on certain websites, he said.
Strict French law does not reflect new practices
The rules are governed by the 1970 ‘Hoguet law’, which lists the services that card-carrying estate agents must provide, along with obligations such as insurance, financial guarantees, written mandates and record-keeping.
The authority said the law may be out of date as new practices, already operational, work without adhering to this and without a large rise in complaints.
Alternatives include person-to-person selling using listings websites (though sale deeds must be signed in front of a notaire), chasseurs immobiliers (‘property hunters’), or coachs immobiliers. The latter offer tips on buying or selling strategies.
Read more: Hundreds of estate agents in France are breaking the law
Agents are motivated by fees to get a sale and good price
Mr Allouche said the report was initiated at the request of the Finance Ministry in the context of cost-of-living rises, and it seems to have started from an assumption that agents charge too much.
He said the amount received rises and falls with prices, and that clients accept this.
A fixed fee alternative is rarely seen, with the report noting that a few online-only agencies (representing 1% of the market, mostly in cities) that used to offer it have tended to revert to percentages.
Mr Allouche said the system motivates agents to get a sale and a good price.
Agencies are free to offer the rate they want, he said, but one network that made a selling point out of offering 4% had gone out of business.
Agencies are, however, open to negotiating on fees to get a sale. This used to be banned, he said.
“It is true there are some workers offering cheaper fees, but you don’t get the same service.”
‘Deregulation like Spain would be wrong’
According to the report, 52% of sales are through traditional agencies, and another 15% via mandataires, self-employed commercial workers who need a partnership with an agency and cannot supervise contract signing or take sales money.
Person-to-person is next most popular, at 30%.
Mr Allouche said it would be wrong to completely deregulate as has happened in Spain.
The authority also suggested parts of the job could be done by other workers, but Mr Allouche argued this would result in no one seeing it through “from A to Z”.
“Everyone in the profession is opposed to this report. It is an aberration” he said.
Costs are higher for agents in France than in other EU countries
According to the report, French agents make lower margins than the EU average (14% compared to, for example, 35% in Germany). This is due to high expenses, Mr Allouche said.
Joanna Leggett, marketing director for the Leggett Immobilier network, said fees are often higher than in the UK because France is bigger and agents may, for example, drive an hour to a viewing.
Employment costs are also higher. Leggetts has a team that draws up pre-sale contracts and guides clients through the buying process, whereas in the UK the solicitor does this.
The industry is also much more regulated, she added. For example, an agent must undertake annual training on laws and energy-efficiency rules.
As for her agency in particular, she said they specialise in helping international clients, with bilingual agents, translations of documents, and ‘hand-holding’ through the whole process.
Agents will also often share local contacts, from plumbers to dentists, and even introduce the client to the mayor. “That all saves time, money and stress.”
If your French is not good, trying to understand all the paperwork and negotiate on prices will be difficult without an agent, she said, and if you use unlicensed services, you will have “no comeback if things go wrong”.
“Nobody remembers how much the estate agent charged when they look back on the houses they have lived in, but they do remember if they ended up in court, lost money or have to watch dozens of tourists hike past their door each day because they didn’t understand there was a public right of way.”
Housing market in France
Interest rates are expected to hit 4% by September, compared to 1% in January 2022.
At the same time, estate agency federation Fnaim predicts around a 15% drop in sales compared to last year, and an average lowering of prices of around 5%.
So far, this has been more marked with houses, which have seen a slight drop, compared to flats, where prices have plateaued, Fnaim says.
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