So, what's your budget, then?
How do you know how far your money will go? Tim Williams, Finance Director of Beaux Villages Immobilier, gets down to the pounds and pennies.
Scroll down for our budget calculator.
Is it just me? I dislike that question. It feels intrusive. And I’m an ‘insider’. I work in the industry.
What I like to hear is, ‘How much would you like to spend?’ I’m a sensitive flower. And of course my standard response would be, ‘As little as possible!’ We’re no further forward………..
So - truthfully - how is an estate agent expected to help me (you) if they do not know the answer? (Let’s put aside for now those agents who do know the answer and promptly ignore it……..)
Now - what IS your budget? Maybe this all seems obvious. Possibly patronising? Conversely, it is quite possible you do not actually know. I didn’t. Looking back and with the great gift of hindsight.
Perhaps it varies greatly according to fluid personal circumstances. ‘Buying on a budget’ is all relative, whether you have €50,000 or a million. You will have expectations. You will have more, or less, local knowledge.
And then there is what happens once in France. Many factors come into play. The start point for this article assumes you have conducted research into lifestyle needs, and income and expenditure elements. And considered whether a mortgage is sensible for fiscal reasons and likely from the point of view of being granted a loan? You will need a concrete plan to make the repayments, rather than an aspiration to earn money once in France.
This is all about the capital purchase. In your home town, how far your money will stretch might be pretty obvious. If you are moving to a different country there are many considerations.
What does your budget include?
MOST advertised prices include the fees charged by the property listing agent.
Who is responsible for the fee varies, however it may be a moot point as it is anyway a cost of purchase.
What is rarely included is the ‘notaire’s fee’. The notaire actually receives only a proportion of this. Much of the stated fee is French ‘stamp duty’.
For budgeting purposes allow 8% over and above the agreed purchase price.
At very low prices it may be more, otherwise you may get some back.
It will be a bit more for a purchase involving a mortgage and less for cash.
Fees are calculated on a sliding government scale and also vary according to the amount of work undertaken.
If you engage a surveyor, additional solicitor, or property finder, you will need to make an allowance for these costs.
Allow a bit of margin?
Having arrived at a number with which you are comfortable, do you tell the agent(s) the truth - or do you hold a bit back? Difficult. Nobody really wants to ‘dance’, and yet it keeps on happening. Everyone wants to sell at the top of the market and buy at the bottom.
Human nature means that agents will vary in how they treat what you tell them.
Some may be very literal and not show you anything they believe you cannot afford.
Others, armed with confidential knowledge of the seller’s circumstances may show you one property at, say, 10% over budget and NOT show you another where they believe the price to be fixed……….what a shame if in reality you might have stretched to afford it (but you were holding money back).
Honesty with your agent is my best advice. Most are worthy of it. It is in their interests to broker a happy deal. And ultimately are you not better off seeing something you cannot afford (irritating, I know!) than missing something you can?
You wouldn’t ever buy anything else without knowing the price.
If you are selling sterling to buy euros, the exchange rate that you fix will determine how many euros you have to spend.
Speak to a specialist currency broker early on in your search, once you have decided to buy something. You can do all sorts of clever things such as agreeing on a rate in advance.
Know the area.
Different areas will produce very different prices and therefore you will get more or less for your money.
Available public statistics for things like price per square metre. They are quite broad, and usually include new and old, apartments and houses, city and rural………not overly helpful.
Finding sensible comparables in a tight geographical area can be almost impossible.
It’s time to blend your instinct for what you want with whether or not to trust a local expert estate agent. And to decide whether you are ruled by your property wish-list and its characteristics, or where the property actually is. Or both.
What do you want and what do you need and do you know the difference? The impact on your budget could be enormous. What you are taken to see and therefore what you ‘get for your money’ (and by extension how you arrived at your budget) depends on what you intend to go shopping for.
A very typical example would be that it’s great to be within the smell of freshly baked bread and to be able to walk to the boulangerie. It will come at a premium price. And there are other considerations such as neighbours who want the same thing, and the baker who wants to be near lots of people.
So do you want to be near lots of people and pay more? Or drive to the bread. 20 minutes or half an hour from a city……..which bit of the city? And why?
Do you want to live in the suburbs, or prime French commuter-belt so that you can visit occasionally, or are you better off being further away and using Park and Ride or a hotel for special trips? Or do you really need to be there? And does your agent know?
Some agents are skilled questioners. Others are simply nice people doing a job to support a lifestyle choice. What we all have in common is a need for you to take responsibility for communicating what you want. Here comes that dirty word: compromise
If you find you are disappointed by the choice on offer, look at whether you have asked for more than you ever truly expected to get. Ask yourself what would I get if:
I dropped the 5th bedroom?
Moved an hour from the city?
Was prepared to do a bit more work?
Settled for less grass to cut?
Bought a separate property for the income element?
Cycled to the bar?
And tell your agent the answer !!
Then there is that entirely unpredictable tug on the heart strings (what is, ‘Je ne sais pas’ in French?). For some of us the best laid plans and spreadsheets evaporate in the blink of an eye. Holidays are cancelled for the next 10 years and unreasonable promises made between spouses to secure the one with the blue shutters.
What does all this look like as a financial model?
Can one model this accurately? Probably not. If you could, it might look something like this:
You can edit the sheet below, or click here to open one set up for you.
Margin for negotiation again.
Everyone wants a deal, however beware media reports of prices being slashed and vendors desperate for your money. It is as individual as all these properties. Properties this individual are difficult to value and compare. If price is your greatest or only driver, make sure your agent is used to dealing with such a commercial approach.
You might get a bit off the one you want, or a lot off the one you don’t! Half-price might still be over-priced. ‘Asking terms’ might be great value. What is your motivation?
I could write a whole article about this.
Briefly, by way of example only, if you need to buy furniture for your new home, make a budgetary allowance rather than insisting the seller leave their family heirlooms within an offer price!
The right house is out there for you. France, and your choice, is enormous.
Choose an agent first, and find the house together.