Why are Dordogne estate agents so expensive?

People looking for Dordogne property who are accustomed to UK estate agents' commission of 2% or less often express shock at the amounts charged by French agents. Our own flat rate of 5% may seem high: believe it or not, we're cheaper than many of our competitors. Commissions as high as 8% are common.

To understand the different environment of Dordogne property, you need to understand the economic forces behind an estate agency. In essence, there are two: the drive to profit, pushing rates up; and the pressure of competition, pushing them down.

The upward force

While the basic job of UK and French estate agents is the same, in practice they are vastly different.

First, the French move house less frequently than the British. So the volume of transactions is smaller. Secondly, the French population is dispersed over a much larger area than the British. We take properties on within about a 50km radius of Ribérac – about an hour's drive. As a result, accompanying buyers on viewings is vastly more time-consuming than it would be in the UK.

So: fewer transactions per annum, and more time spent on each, with both buyers and sellers. Against this, the overheads of a Dordogne estate agency may well be much the same as in the UK. For those involved in international sales, indeed, they will be higher, since agents have to advertise both in France and abroad, increasing the overhead.

More work drives up overheads

In addition, the Dordogne agent immobilier has an advisory role that goes way beyond the function of a UK estate agent. In the UK, once the agent has obtained an acceptable offer, he will pass the matter to a solicitor. Apart from periodic checks on progress, his role is over. But France has no real equivalent of a solicitor. As in other Continental countries, the notary is the person responsible for giving ultimate legal effect to the sale and purchase. The notary is also required to give legal advice – but he does so in an objective and informative way, rather than espousing the cause of a buyer or a seller.

French law requires estate agents to adopt an advisory role. Many of our professional colleagues keep this to a minimum. However, we believe that this is an opportunity for the Dordogne estate agent, rather than a gap. We prepare contracts in bilingual format, guiding buyers and sellers through the preliminary legal formalities. Obviously we are aware that we have conflicts of interest, but we try to steer our way through them, making sure that both sides are aware of what is involved and telling them that they are perfectly entitled to get impartial legal advice from a third party if they wish.

All of this takes time and expertise. We do it for no additional remuneration – it comes from the commission we charge.

The downward force – competition

Obviously there is a ceiling to the amount an agent can charge. If one agent were to charge 50% where others charge under ten it is unlikely he would get much business. But I have to say that the price competition among Dordogne estate agents does not appear so strong as to force rates down.

Where a seller gives his property to a number of estate agents – as is usually the case with Dordogne property - French competition law requires the net sale price to be the same. In this way there can be price competition among the respective estate agents. Since properties are advertised at a commission-inclusive price, it follows that the agent with the lower commission will advertise the property at a lower sale price than his competitors. It pays for buyers to shop around.

However, this does not seem to occur as much as you would expect. At the lower end of the market we are currently charging two thirds of the rates charged by our competitors. But there is no evidence that this price differential is bringing more buyers or indeed sellers. People seem to be remarkably accepting of the rate charged, regardless of its level. As a result, the downward force of price competition is less strong than you would think.

In a nutshell: Dordogne estate agents are more expensive than UK ones because they have more to do, with less transactions in number, than their UK counterparts, while suffering similar overheads. And it is likely to stay that way so long as price competition remains weak.

Antony Mair
MCM Dordogne Property