Mastering the different stages of a real estate transaction helps to limit unforeseen events, anticipate timelines, optimize costs, and most importantly, secure the sale or purchase of your property. Whether you are a seller, buyer, investor, or first-time buyer, this article details each step of a successful real estate transaction.
What is the duration of a real estate sale?
The average duration of a transaction is 3 months (excluding renovations), but it depends on several variables:
Typical Schedule
Week 1 to 2 : signing of the preliminary agreement
Day 3 to 13 : withdrawal period
Day 14 to 60 : obtaining financing, lifting conditions precedent, and response from the town hall to the DIA (Declaration of Intent to Alienate)
Day 60 to 90 : signing of the authentic deed
Several key factors influencing the duration of a real estate transaction. The speed of banks, the complexity of the property (co-ownership, joint ownership, succession) and the responsiveness of the notary are decisive. Similarly, the availability of technical diagnostics (DPE, etc.) and any possible right of preemption can accelerate or delay the sale.
The sales agreement
What is a sales agreement?
The first step in a formal real estate transaction is the signing of the sales agreement. It is a pre-contract whereby the seller agrees to sell, and the buyer agrees to buy, under clearly defined conditions.
This document formalizes the agreement between the two parties before the signing of the authentic deed at the notary's office. It notably contains:
the identity of the parties
The description of the property
The sale price
The withdrawal period
The suspensive clauses
An anticipated date for the final signing
The withdrawal period
The buyer has a withdrawal period of 10 days (Article L271-1 of the Construction and Housing Code). This period starts the day after the hand delivery or receipt of the agreement. During this time, they can cancel the sale without justification, and without penalty.
The deposit: a financial commitment not to be overlooked
When signing the sales agreement, the buyer generally pays 5% to 10% of the sale price into a escrow account held by the notary. This amount proves their commitment and will be deducted from the total amount at the signing of the authentic deed.
If one of the parties withdraws after the withdrawal period or without a reason provided by a suspensive condition, they may be forced to pay damages, or even be required to complete the sale, and the seller may retain the security deposit as compensation.
The right of preemption
What is this right about?
In certain areas, local authorities can exercise a urban preemption right (DPU). This allows them to acquire a property before it is sold to a private individual, with the aim of urban development or social housing.
The procedure
The notary transmits a Declaration of Intent to Alienate (DIA) to the town hall. They have two months to:
Not respond (sale authorized)
Refuse the purchase
Exercise their preemption right and buy the property at the price agreed upon
The exercise of the right of preemption can have several important consequences on the real estate transaction. It can delay the sale by extending the deadlines, force the seller to transfer their property to the city if it decides to exercise this right, and impose new negotiations between the seller and the community, thus altering the initially planned conditions.
The authentic deed: the final signature with the notary
Definition and schedule
The authentic act is the official document signed by the notary, 2 to 3 months on average after the compromise, which transfers the property's ownership to the buyer. It marks the end of the legal steps and the beginning of the property's actual life, whether intended for habitation or rental.
Role of the notary
The notary is an essential player, ensuring regularity and transparency:
Drafts the act
Verifies the mortgage situation of the property concerned
Publishes the sale to the land registration service
Collects the funds and transfers them to the seller
To sign the authentic deed with the notary, several documents are essential. The seller and the buyer must provide the title of ownership, identification documents, proof of financing, a complete file of technical diagnostics as well as the information related to their civil status. These elements allow the notary to verify the compliance of the sale and ensure the legal security of the transaction.
The suspensive conditions
Understanding Conditional Clauses
The conditional clauses allow the validity of the sale to be contingent on the occurrence of one or more events. If they are not fulfilled, the sale is cancelled at no cost to the buyer.
The most common cases
Obtaining a mortgage
Sale of another property by the buyer
Absence of easements or disputes
Absence of works or ongoing proceedings in the condominium
As part of a sales agreement, conditional clauses play a fundamental role in securing the buyer, especially when it comes to a first real estate investment. They allow for legally disengaging from an acquisition if certain key elements are not met, without financial penalty.
One of the most common conditional clauses concerns obtaining a mortgage. Let’s take a concrete example: an investor signs an agreement with a clause stipulating that they must obtain a loan of 250,000 euros over 25 years at a maximum rate of 3.8%. If no bank grants this loan under these conditions, they can theoretically withdraw from the transaction and fully recover their deposit.
However, for this conditional clause to be validly invoked, the purchaser must demonstrate good faith. This implies justifying that they have genuinely undertaken serious steps to obtain financing. In practice, this means presenting at least two letters of rejection from different banks. Without this documentation, the seller is entitled to consider that the condition has not been fulfilled, which may lead to the loss of the deposit paid.
It is therefore essential to understand that conditional clauses are not a simple escape route. They impose rigorous behavior and real involvement in the search for financing. Their purpose is to protect the buyer against unforeseen events, provided that the buyer respects their contractual commitments and adopts a serious approach.
What happens if they are not lifted?
The sale is null and void: the buyer recovers their deposit, except in cases of gross fault. The seller cannot claim any compensation.
What are the costs and fees to anticipate?
A real estate transaction generates several types of fees that it is important to anticipate to avoid unpleasant surprises.
For the buyer
For the buyer, it is necessary to plan for notary fees, which generally represent between 7 and 8% of the purchase price in the old property and between 2 and 3% in new properties. Additionally, there are bank fees related to the preparation of the file, guarantees, and borrower’s insurance. One must also not forget any potential compliance or renovation work, as well as agency fees if they are not included in the displayed sale price.
For the seller
For the seller, certain expenses must also be considered. They will notably have to carry out the mandatory diagnostics and may be affected by a real estate capital gain taxable under certain conditions. This can be supplemented by mortgage release fees if the property is still secured by a guarantee, as well as any potential work or repairs to enhance the property before the sale.
Another point often misunderstood concerns the moment when funds must be available. At the signing of the authentic deed at the notary's office, the entire amounts must be paid. This implies that financing must be completed, that the loan offer has been accepted, and that the legal reflection period of 10 days has been respected.
The notary then takes care of requesting the release of funds from the bank, usually a few days before the signing. It is therefore essential to have forwarded all necessary documents in time and to have completed the loan setup well in advance.
It is also important to note that notary fees must be paid in personal funds. They are generally not included in the mortgage loan, except in exceptional cases. Therefore, the buyer must have this amount available in their bank account at the time of signing.
By understanding each step, from the promise of sale to the signing of the authentic deed, including the management of conditional clauses and adherence to legal deadlines, you put all the chances on your side to successfully realize your project.
Also discover
