In this comprehensive guide, discover long sales in french real estate: the definition, characteristics, and advantages of this type of transaction. What’s the difference between this and a traditional real estate sale? When should sellers and buyers consider this option? In the real estate market, when it comes to selling to buy or buying to sell, time is essential! Optimhome explains this in detail and supports you in your real estate projects across France. Browse our real estate listings to find the property you’re looking for, or get an estimate on your house or apartment for sale with one of our local, independent real estate advisors.
Definition of Long Sales in Real Estate
What is a Long Sale?
A long sale is a type of real estate transaction where the time between signing the preliminary sale agreement (or sales promise) and the final sale document is extended beyond the usual three months.
- In a traditional sale, this period is typically about three months to allow both parties to prepare for the transaction (e.g., securing financing, completing notarial verifications).
- In a long sale, this period can be extended to six months or even up to 12 months, depending on the needs of the involved parties and the agreement made.
This type of long-term transaction generally provides greater flexibility for one or both parties. For instance, a seller might request a long sale if they haven’t found a new home yet, while the buyer might need additional time to sell their current property or complete financing. It’s essential that this extended timeline is agreed upon by both buyer and seller at the time of signing the preliminary contract.
Differences Between a Traditional Sale and a Long Sale
In real estate, the main difference between a traditional sale and a long sale lies in the duration. As noted, a traditional sale involves a three-month period between the signing of the preliminary sale agreement and the final notarial signing. This time is generally sufficient to complete administrative and financial processes.
In a long sale, however, this period is simply extended, allowing more time for both parties to arrange their transition. Long sales are often chosen when the seller needs extra time to relocate, or when the buyer needs to wait until their current property sells to finance the new purchase. However, a long sale does carry risks, particularly concerning fluctuations in real estate market prices over this extended period.
Why Opt for a Long Real Estate Sale?
Benefits of a Long Sale for Sellers
For sellers, a long sale offers several advantages, notably more time for personal arrangements. This type of sale may eliminate the need for a bridge loan or temporary rental housing. A seller might not yet have found a new residence when signing the sale. A long sale allows them to finalize the sale of their current property while having additional time to search for a new one, free from pressure. This option also provides financial security, as the seller knows they have time to find a new property while having already secured the sale. This avoids the costs of multiple moves or the need to store belongings until a new home is found.
Benefits of a Long Sale for Buyers
A long sale has advantages for buyers as well. This type of purchase gives the buyer more time to gather funds, whether through the sale of their own property or by securing financing without rushing. This reduces the need for bridge loans, which can add fees and complexity. If the buyer is waiting on the sale of their current property, they can synchronize both transactions more easily. This flexibility helps them better plan their financial approach, whether through the proceeds from their current home or optimizing their down payment.
Ideal Situations for a Long Sale
Seller Seeking a New Home
A long sale is especially advantageous for sellers who have received a favorable offer on their current property but haven’t yet found a new home. In this case, the seller can accept the offer and benefit from additional time to complete their home search. Selling a property before finding a new one can be stressful, especially in a competitive market with limited housing options.A long sale helps sellers avoid complex financing arrangements, potentially saving on credit management costs. They also avoid needing temporary accommodations or a rental between moves, making for a smoother transaction.
Buyer Awaiting the Sale of Their Property
A long sale is also ideal for buyers who need time to finalize the sale of their current property. Here, the buyer needs additional time to free up funds for the new purchase. The goal is to synchronize both transactions, ensuring that proceeds from the sale are ready to fund the new acquisition. This avoids the need for bridge loans, which come with extra costs and may complicate finances. By choosing a long sale, the buyer gains an extended timeline, allowing for a well-planned financing approach without rushing simultaneous transactions.
Drawbacks and Risks of a Long Sale
Real Estate Market Price Fluctuations
One of the primary risks of a long sale is price fluctuation during the extended period. Real estate values are subject to regular changes, which can affect both parties.
- For the seller, there is a risk of regret if the market prices rise significantly after signing the preliminary contract. If property values increase greatly, the seller may feel they undersold the property.
- For the buyer, the opposite risk exists: if real estate prices drop during the extended period, they may feel they overpaid before even signing the final sale. Declining market values can also impact the buyer’s borrowing capacity if interest rates change.
Coordination Challenges Between Parties
Coordinating simultaneous transactions presents a significant challenge in a long sale. Synchronizing schedules between the buyer and seller can be complicated, especially when each party has other property-related constraints. For instance, the seller may need more time, while the buyer may wish to take possession sooner. Such timing discrepancies can complicate negotiations, especially if delays occur with notarial tasks or financing issues. The parties must agree to extend the engagement, potentially incurring additional costs like adjustments for immobilization fees or deposit changes.
How to Set Up a Long Sale?
Importance of Preliminary Contracts (Sale Agreement or Sales Promise)
A long sale requires careful detailing in preliminary contracts, like the sale agreement or sales promise. These documents outline the transaction terms, particularly the extended period between signing the preliminary contract and the final sale. For a long sale, this extended period must be specified clearly. Generally, it can extend up to six months or more, depending on the agreement. Conditions like financing or selling another property must also be well-defined to prevent future disputes. The notary plays a crucial role in drafting and securing these documents to ensure the transaction proceeds correctly.
Negotiating Specific Terms with the Buyer
Negotiating terms for a long sale is crucial for both parties. The seller might negotiate a lower deposit if the buyer agrees to wait several months before taking possession. This can reassure the buyer in their investment while protecting the seller if the transaction fails. Financial compensation may also be negotiated for the buyer's waiting period. For instance, an immobilization fee can reward the buyer for holding funds during the wait. Flexible terms may also cover property occupancy, allowing the seller to remain in the property post-sale for compensation.
Is a Long Sale Right for Your Real Estate Project?
For Sellers Needing Flexibility
A long sale is ideal for sellers who want more control over the sale process, without rushing. It suits sellers who haven’t found a new residence yet and wish to avoid costly interim solutions. This option also provides peace of mind for completing notarial and other formalities. In a market with limited availability, sellers have time to find a new residence if needed. However, the seller must ensure the buyer agrees to wait, which may require payment or other negotiation.
For Buyers with Financial Constraints
For buyers with financial constraints, a long sale allows extra time to complete processes, particularly when a current property sale is needed to fund the purchase. This is often the case in slower markets or with properties that may take time to sell. This additional period also lets the buyer prepare financially and negotiate mortgage terms with their bank. This solution offers a balance for sellers needing flexibility and buyers requiring financial time, creating a win-win for both.
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