Real estate commission levels are too high and opaque, says Competition Authority. Buying/selling real estate.

If real estate agent rates in France were reduced to the European Union average, households could realize an annual income of nearly 3 billion euros, the Competition Service said. High real estateagency costs are having a negative impact on French consumers, the Competition Service said in its report to the Economy Ministry.

In 2022, the average commission rate of real estate intermediation professionals in France was 5.78% of the sale price, compared to almost 4% in the rest of the European Union. This was reported by the Competition Service after the government asked it last year to look into the problem.

Real estate: the first wave of agency bankruptcies

The organization has identified several "problems", including the opacity of the commission rates practiced, the asymmetry of information between the different actors and the fact that they are not all also subject to the Oge law, which has regulated real estate since the 1970s. These difficulties are related in particular to the emergence of "new professions" in real estate (online agencies, real estate coaches, intermediaries...) that are not subject to the same legal provisions as classic real estate agencies, but work on behalf of agencies. Their services are then included in the commissions, sometimes quite opaquely. The high costs have a negative impact on French consumers, the Competition Service noted in its report submitted to the Ministry of Economy last week and published on Wednesday.

If the commission rates of mediation professionals in France were level with the European Union average, an annual income of almost 3 billion euros could be generated for households, says the Competition Service in its opinion, which is a recommendation. The Competitive Service proposes a "reform" aimed at "enabling households to determine what they want to do themselves and what they want to delegate to intermediaries in order to regain control of their budget", explains Thibault Vergé, vice president of the Competitive Service. The report also proposes to establish a complete list of services provided by professionals, to harmonize the rules of listing, including online, and to make available real estate information that notaries already have on prices and commissions.

A resident who exercises his or her right to pre-purchase when selling his or her home does not have to pay a fee

According to a recent decision of the Court of Cassation, a tenant exercising his right of pre-purchase on the sale of his home may not be subject to real estateagency commission. Based on the factual situation, the tenant refused to buy his home and left it. The real estate agent then found another buyer at a lower price and a pre-purchase agreement was concluded. The notary had to inform the former tenant of the changed terms, whereupon he decided to buy for the reduced price, but refused to pay a commission to the agency. The agency argued that if the sale was possible between the owner and his former tenant, it was due to the introduction of another buyer who accepted the price, allowing the former tenant to exercise his right of pre-purchase. The sale was therefore the result of an agency, they added, and the former tenant could only buy on condition of accepting the same terms as the stipulated buyer, who had to pay a commission to the intermediary. These arguments were rejected by the judges. The tenant had exercised his legal right at the suggestion of the notary, not the agency, and no commission could be imposed on him.

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