A method to value your French property

Let me explain my method for valuing a property in France!

Here is the analytical approach that I suggest you take to estimate the value of a property you might buy :

First you need GROSS SURFACES: To get them, Ask the seller for sketches, or floor plans with room dimensions. Or if they are not available measure individual room surfaces yourself!

Then you’ll turn these into what I call “VALUABLE SURFACES”. To do that, Compute a room-by-room value: multiply the surface of each room by the base value per square meter, and multiply by a “type ratio” for different rooms or buildings: 100% for habitable rooms, 50% for verandas and outbuilding that can be converted, 30% for garages and sheds and 15% for dilapidated buildings. When you’re done, Add everything and you will get the total property valuable surface.

Then you need BASE VALUE per square meter. For this, you’re getting in more subjective territory because you have to assess the estimated value per square meter depending on the type of property like stone house, recent built, architect’s house, or “house in a good location.” Ideally, you would use price information from the recent sales of comparable properties.

From that information, you calculate the GROSS PROPERTY VALUE. That one is simple: just multiply the total property valuable square meters by the base value per square meter.

You can also compute the CASH FLOW VALUE if it is relevant. To do that, calculate the rental income the property could generate if offered as a vacation rental. Then deduct service charges and taxes. Finally, divide by your expected rate of return and you will obtain the cash flow value. You will need to ADJUST the gross property value to take into account things like the property’s general location (as in its distance from the large nearest village, from motorways or airports), and the desirability of the neighborhood, also specific features in the house (like French ceilings, an old fireplace, or a swimming pool), and finally possible disturbances (like road or traffic noise, or an overlooked garden). Obviously Each adjustment reduces, or increases, the property gross value.

Because you can’t assess the value of a property in a vacuum, you need to compare the gross property value you have calculated with the values of “comparable properties”. By that I mean properties of comparable characteristics, in the appropriate comparable area, which could be the village itself or the whole of the area depending on the type of property. If you can, It is better to use recent-transaction information. But the prices of listed properties are useful too. This will help you determine if you should revisit the assumptions you have made in the earlier steps.

The last step is to decide whether you should augment or reduce the value you are ready to pay for that property according to how much you like it. If you like this property better than others, you could decide that it is worth more to you than the other one in your list. That’s the coup de coeur. This is very subjective, but that’s all right. That is why it is so very important to start with an analytical basis.

Obviously this analytical valuation exercise is a very useful tool in the negotiation process. Because sellers will usually not have the resources to dispute it. Having a documented valuation won’t prevent the sellers from arguing about the price with you. But it will put you in a stronger position.

Right, we’re done! Now you know the steps. I know this method is a bit technical. But I hope it makes some sense to you! And OK, I also know that most of you will not be inclined to follow that method on your own. But I wanted you to grasp the process. It’s not rocket science, but it’s not science either and there is an important subjective part to the process.
ARE HOUSE HUNTING? You can still get this guide for FREE. [Since 2017 my readers tell me if useful, so maybe it is 😊] Here is the table of content: 1 Ready, aim (about preparing your project), 2 The French Context, 3 Real estate agents, 4 Valuation, 5 Legals, 6 Money matters, 7 renovating a house, 9 Psychology, 10 Buying a gîte.

You can read the online here: https://tinyurl.com/FPCguide24, or follow the link to get your (free) PDF copy: https://www.frenchproperty.coach/guide

NEED REAL ESTATE ADVICE? If you require customized assistance in your search (or anything French real-estate related) don’t hesitate to reach out! Best, Pierre Guillery [RCS Nimes 533018321, carte prof. CPI30022018000032895.] #FRENCHREALESTATE #FRENCHREALESTATEAGENTS #FRENCHHOUSEHUNTING #FRENCHHOUSE