Valuation for banks and other financial institutions:

Brief description:

Do you need a valuation for your discussions with the bank or for legal reasons? Do you want to know if the asking price for a property is reasonable?

The Avis de Valeur valuation gives the surveyor’s opinion of the open market value of the property and is in most cases sufficient.

The surveyor uses formal instructions and procedures, defined by the relevant professional organisations such as the Royal Institution of Chartered Surveyors in France and/or the Chambres des Experts Immobilliers France, to determine that value

To value a property, the surveyor must inspect the general condition of the property, i.e. there is no need to investigate structural defects, urgent remedial repairs, etc. His valuation report therefore does not replace a full technical survey.

Does your insurance company ask for a valuation? Then they probably require a “re-instatement cost” valuation. The surveyor will calculate the cost of “re-build” of all or part of your property in case of damage (fire, etc.).  This is particularly interesting when it concerns an old building (a 200/300 year old chateau, for example)!


Detailed description


The asking price


Not many people know if the asking price of a property reflects its market value. Fortunately, there is no need to have sleepless nights as a qualified, independent and objective FPS valuer can give you the market value of the property. You can then determine if you are paying the right price for it.

Approximately half of all French property transactions are directly between buyer and seller but the majority of foreign buyers purchase properties via estate agents. Perhaps these buyers have the illusion that properties marketed by estate agents are priced correctly.

It is true that an experienced estate agent should know – approximately at least – what a property is worth. In many cases that is irrelevant as it is often the owner who decides what the asking price will be. Few estate agents enter into a discussion with owners for fear of losing a client. To determine the asking price, the owner adds the estate agent’s commission to what he wants for his property. That commission can be anything between 4% and 10%.


Are you talking to an estate agent about a property that you like? Then you should know that

  • the estate agent’s commission is probably included in the asking price
  • the market value of that property could be significantly lower than the asking price
  • that market value does not include the commission of the estate agent
  • the estate agent’s estimation of the market value may be completely wrong

It is possible that the owner also sells his property privately.  In this case you should be able to purchase the property at a lower price but it is still possible that you will be paying more for the property than its market value.


Avis de Valeur

The Avis de Valeur is the Surveyor’s opinion of the Open Market Value of a Property, i.e. it is the estimated amount for which that property would be purchased by a willing buyer from a willing seller, on the date that the surveyor valued the property.

To establish that value, the surveyor follows the instructions and procedures that have been defined by RICS and/or CEIF. These organisations demand the highest level of professionalism and the Avis de Valeur is therefore a widely accepted document.

Why don’t you ask FPS to value the property that you would like to buy? Nobody else will know the outcome of this valuation as FPS will produce the Avis de Valeur exclusively for you. It will provide you with a valuable tool to negotiate about the price if the asking price is higher than the market value.

There may be other reasons why it is necessary to know what a property is worth. Sometimes it is needed for a divorce settlement or an inheritance. The Avis de Valeur that FPS produces can generally be used for legal proceedings as it is accepted by most courts of law.


Borrowing money


Any reputable money lender wants to be able to assess the risks they run before they hand over any money to someone who needs a mortgage or money to buy a business. That is why they need answers to sometimes seemingly obvious questions:

  • Does the property actually exist?
  • Is the condition of the property sufficiently sound to ensure that the company will be financially secure in case the client cannot keep up the repayments and the property must be repossessed?
  • What is the market value of the property or the business?


Answers must be provided by a qualified valuer who is registered with a recognised and trusted professional body such as RICS or CEIF. Valuation reports, produced by FPS experts, are accepted by banks and other financial institutions.

This type of valuation is normally commissioned by the lender, not the buyer. It is the lender who decides if you are allowed to know the result of the valuation.

The valuation inspection is less thorough than a technical survey. To be able to value a property, the surveyor must investigate the general condition of that property. However, certain issues such as structural defects, urgent remedial repairs, the presence of damp, costs of remedial repairs, etc. are of no interest to the mortgage lender. The outcome of the valuation inspection should therefore not be used to make a purchase decision.

Insurance


It is obligatory under French law to insure the property that you own. The insurance company is not interested in the market value of a property. It wants to know what it would cost to rebuild the property after it has been destroyed. This is called Building Reinstatement Costs.

How much do you need to insure the property for? As with all insurances, the importance of a correct insurance value cannot be overstated. Insurance companies will question – and probably refuse – to pay out the full claim if your Building Reinstatement Costs is too low. They will only pay you a pro-rata amount and this could cause you a serious financial headache.

FPS can carry out an assessment to calculate the Building Reinstatement Cost. This assessment should not be confused with an Open Market Property Valuation.

The Surveyor also uses the strict instructions and procedures of RICS and CEIF for the Building Reinstatement Cost assessment.