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In an increasingly competitive real estate market, justifying your commission is a challenge that real estate agents frequently face. Many clients wonder if they could sell their property on their own, avoiding agency fees. However, the work of a real estate agent goes far beyond merely connecting buyers and sellers. To convince clients of the legitimacy of their commission, agents must not only demonstrate their added value but also explain how their expertise, network, and specific skills ensure a successful transaction. Here’s how real estate agents can effectively justify their commission.

## 1. Accurate property valuation

### **Comparative market analysis (CMA)**

One of the first steps in any successful real estate sale is an accurate property valuation. An experienced real estate agent performs a Comparative Market Analysis (CMA), which considers recent data on sales of similar properties in the area, current market trends, and the specific characteristics of the property in question. This in-depth analysis helps set a realistic and competitive selling price, preventing the property from staying on the market too long or, conversely, being sold below its true value.

### **Knowledge of local trends**

A real estate agent is familiar with the specific dynamics of each neighborhood, including factors that may influence a property's value, such as urban development projects, changes in local infrastructure, or shifts in regional demand. This local knowledge is crucial for adjusting the price according to market expectations, thereby maximizing the chances of a quick sale at the best price.

## 2. Implementing an effective marketing strategy

### **Maximum visibility through a professional network**

One of the primary strengths of a real estate agent lies in their network. By working with a professional, the seller benefits from increased visibility for their property through exclusive platforms, partnerships with other agents, and databases of potential clients. This network also helps target the most qualified buyers, reducing the time needed to close the sale.

### **Digital marketing and property enhancement**

In today's context, effective online presence is essential for selling a property. A skilled real estate agent implements digital marketing strategies, including creating compelling listings, managing social media, and optimizing visibility on search engines. Additionally, the agent can organize professional photography sessions, virtual tours, and home staging to showcase the property and attract the maximum number of visitors.

### **Organizing promotional events**

In addition to digital marketing, a real estate agent can organize events such as open houses, private viewings for qualified buyers, or special presentations for investors. These initiatives increase the chances of a quick sale and often result in competitive offers, helping to maximize the selling price.

## 3. Managing complex negotiations

### **Professional negotiation**

Negotiations are often the most delicate stage of a real estate transaction. A real estate agent provides valuable expertise in managing discussions between the seller and the buyer. With their experience, the agent can negotiate objectively and effectively, protecting their client’s interests while finding a mutually acceptable agreement.

### **Handling counteroffers and compromises**

When an offer is made on a property, it is common for it not to meet the seller’s expectations exactly. The real estate agent plays a key role in managing counteroffers, ensuring that necessary adjustments are made while maintaining the buyer's interest. This ability to handle compromises is often what makes the difference between a successful sale and a failed one.

### **Ensuring a secure transaction**

Beyond negotiations, the real estate agent ensures that all legal and financial aspects of the transaction are properly managed. This includes verifying documents, coordinating with notaries, and ensuring that all contractual obligations are met. This oversight minimizes the risk of disputes and ensures a smooth and secure transaction for all parties involved.

## 4. Expertise and network: Essential assets

### **Access to qualified professionals**

A real estate agent does not work alone. They have a network of qualified professionals, such as notaries, real estate lawyers, architects, and renovation contractors. This network helps resolve any issues that may arise during the transaction and provides clients with reliable and tailored solutions to their specific needs.

### **Reputation and trust in the market**

An established real estate agent often has a strong reputation in the market. This reputation can greatly influence the sales process, as potential buyers are more likely to trust a recognized professional. Additionally, the agent benefits from credibility with other market players, which can facilitate negotiations and administrative procedures.

## 5. Commission: A worthwhile investment

### **Time savings and stress reduction**

One of the most convincing arguments for justifying a real estate agent’s commission is the time saved and stress reduced for the client. Selling or buying a property is a complex and time-consuming task that requires constant attention and rigorous management. By entrusting this task to a real estate agent, the client can focus on other priorities, while being assured that the transaction is in good hands.

### **Maximizing the selling price**

Although the commission represents a cost to the seller, it is often offset by a higher selling price achieved through the agent's skills. An experienced professional knows how to present the property in its best light, attract the most interested buyers, and negotiate effectively to maximize the final value of the transaction. Thus, the investment in commission typically results in a more advantageous net financial return for the client.

### **Legal security and compliance**

Finally, the commission of a real estate agent also covers the assurance that the transaction will be conducted in full compliance with current legislation. This legal security is a valuable asset, especially in a highly regulated field like real estate. By ensuring that all steps are correctly followed, the real estate agent protects their clients from costly mistakes and potential disputes.

## Conclusion

Justifying your commission as a real estate agent requires clearly and convincingly demonstrating the added value you bring to the transaction. From accurate property valuation to implementing an effective marketing strategy, managing complex negotiations, and ensuring a secure transaction, the real estate agent offers a range of services that go well beyond what most individuals can accomplish on their own. By highlighting their expertise, network, and the tangible benefits of their intervention, the real estate agent can prove that their commission is not only justified but also represents a worthwhile investment for their clients.

How to justify your commission as a real estate agent?

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The real estate sector is vast and complex, offering a variety of roles for professionals working within it. Among these roles, two stand out particularly: that of intermediary and that of property dealer. Although these two functions are often confused, they rest on very different legal, economic, and practical foundations. In this article, we will explore in detail these two roles, understand their specificities, and examine how they influence the responsibilities and legal obligations of real estate agents.

## 1. The real estate agent as an intermediary

### **The role of intermediary: Facilitating transactions**

One of the most common roles of a real estate agent is that of intermediary. In this role, the agent acts as a facilitator between the seller of a property and the potential buyer. Their main mission is to bring these two parties together and help them complete a transaction smoothly and effectively.

The real estate agent as an intermediary is responsible for several key tasks, including:
- **Property valuation**: Assessing the market value of the property based on market conditions, the property's features, and current trends.
- **Marketing the property**: Using various channels to promote the property, such as online listings, social media, and virtual tours.
- **Negotiation**: Assisting both parties in reaching an agreement on the price and terms of sale, while ensuring that everyone's interests are respected.
- **Legal and administrative advice**: Helping clients understand the legal aspects of the transaction, such as sales contracts, tax obligations, and local regulations.

### **The compensation model: commission**

As an intermediary, the real estate agent is generally compensated by a commission, which is a percentage of the final sale price of the property. This commission is often shared between the seller's agent and the buyer's agent (if there is one). This compensation model motivates the agent to close the sale quickly and achieve the best possible price for their clients, as their income directly depends on the success of the transaction.

### **Legal responsibilities**

In this intermediary role, the real estate agent is subject to specific legal obligations, such as:
- **Duty of advice**: The agent must provide complete and accurate information to their clients and advise them objectively.
- **Adherence to ethics**: The agent must act with loyalty, honesty, and transparency towards all parties involved.
- **Confidentiality**: Clients' private information must be protected and cannot be disclosed without consent.

These legal responsibilities are crucial for maintaining client trust and ensuring that real estate transactions are conducted in a secure and fair manner.

## 2. The real estate agent as a property dealer

### **The role of property dealer: Investing and reselling for profit**

The role of a property dealer is fundamentally different from that of an intermediary. Here, the real estate agent acts as an investor. They buy properties for their own account with the intention of reselling them quickly at a higher price, thereby making a profit. This business model relies on the ability to identify buying opportunities at low prices, often in properties requiring renovation or located in developing areas.

Key steps in the role of a property dealer include:
- **Identifying opportunities**: Searching for undervalued properties or those with potential for quick appreciation.
- **Renovation and improvement**: Investing in renovation work to increase the property's value before resale.
- **Time and cost management**: Optimizing renovation timelines and costs to maximize return on investment.
- **Quick resale**: Reselling the property within a short timeframe to avoid additional costs (such as property taxes) and make a profit.

### **The compensation model: Profit from resale**

Unlike the intermediary, the property dealer does not earn a commission. Their income comes exclusively from the difference between the purchase price of the property and the resale price, after deducting associated costs (renovation, notary fees, taxes, etc.). Therefore, the financial success of a property dealer depends on their ability to accurately assess a property's profit potential and effectively manage costs and timelines.

### **Legal responsibilities**

The property dealer has legal responsibilities that differ from those of the intermediary. Some of these responsibilities include:
- **Hidden defects warranty**: As a professional seller, the property dealer must guarantee hidden defects that could render the property unfit for its intended use.
- **Tax obligations**: Transactions carried out by a property dealer are subject to specific tax regimes, particularly regarding VAT and capital gains.
- **Strict regulations**: Depending on the country, the property dealer's activity may be subject to specific regulations, including resale time limits to prevent abusive speculation.

These legal obligations are essential to ensure that the property dealer operates within an ethical and legal framework, thereby protecting the interests of future buyers.

## 3. Comparison between the two roles

### **Professional objectives**

- **Intermediary**: The primary goal is to facilitate transactions between buyers and sellers, acting as an advisor and negotiator.
- **Property Dealer**: The goal is to make a profit from the purchase and resale of properties, maximizing added value.

### **Nature of client relationships**

- **Intermediary**: The agent maintains a service relationship with their clients, based on trust and advice. They represent their clients' interests (buyers or sellers) and act on their behalf.
- **Property dealer**: The property dealer does not have clients per se, but potential buyers. They act for their own account, with their personal interest at the forefront.

### **Financial risk**

- **Intermediary**: The financial risk for the intermediary is relatively low, as they do not own the properties they sell. Their main risk is failing to close sales and thus not earning a commission.
- **Property dealer**: The property dealer takes on significant financial risk, as they invest their own capital in purchasing properties. If the market turns or renovation costs are higher than expected, the dealer may incur substantial losses.

### **Necessary skills**

- **Intermediary**: Skills in negotiation, knowledge of the local market, interpersonal skills, and understanding of the legal and administrative aspects of real estate transactions.
- **Property dealer**: Skills in property valuation, project management, finance and accounting, knowledge of construction and renovation, as well as the ability to take calculated risks.

## Conclusion

The roles of intermediary and property dealer in real estate, while sharing some aspects, are fundamentally different in terms of objectives, responsibilities, and risks. The intermediary primarily acts as an advisor and facilitator for real estate transactions, with compensation based on commissions. The property dealer, on the other hand, acts as an investor, buying and reselling properties for their own account to make a profit.

This distinction is crucial, as it influences not only how each role is performed but also the legal and ethical obligations that arise from it. Understanding these differences allows real estate professionals to choose the path that best fits their skills, interests, and risk tolerance.

The different roles of the real estate agent: Intermediary vs. property trader

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The real estate agent's profession is often perceived as dynamic, stimulating and offering many opportunities. However, behind this image lies a far more complex and demanding reality. Unlike many other professions, the role of a real estate agent requires a unique combination of skills, knowledge and personal aptitude that sets it apart from other sectors. In this article, we'll explore the specifics of the real estate agent's profession in depth, highlighting what sets it apart.

## 1. Versatile mastery of a wide range of skills

One of the first specificities of the real estate agent's profession lies in the need to master a highly diversified range of skills. Where some professions focus on a specific area of expertise, the real estate agent must be a true jack-of-all-trades.

### **Negotiation and persuasion**

The art of negotiation lies at the heart of the real estate agent's profession. Whether it's to set the right price for a property, obtain the best terms for a customer, or simply close a sale, the real estate agent must constantly demonstrate persuasion and diplomacy. This skill requires not only a sound knowledge of negotiation techniques, but also an ability to understand the motivations and expectations of all parties involved.

### **Knowledge of real estate legislation**

The legal framework in which real estate agents operate is particularly complex and constantly evolving. Unlike other professions, the real estate agent must not only know the laws and regulations in force, but also how to apply them in a variety of contexts. This includes aspects such as sales contracts, rental regulations, town planning rules, and many others. This legal expertise is crucial to protecting clients' interests and avoiding costly mistakes that could lead to litigation.

### **Management and organizational skills**

The real estate agent must manage multiple files in parallel, each with different requirements and deadlines. This project management requires rigorous organization and the ability to prioritize tasks. What's more, the real estate agent is often responsible for coordinating the various players involved: customers, notaries, banks, contractors, etc. This coordination requires not only management skills, but also the ability to manage human relations effectively.

### **Knowledge of the real estate market**

Understanding the dynamics of the local real estate market is another specificity of the job. This includes monitoring price trends, identifying developing neighborhoods, and correctly assessing property values. This in-depth knowledge of the market enables the agent to provide the best possible advice to both buyers and sellers.

## 2. A profession focused on customer relations

Unlike other professions, where interactions with customers can be limited or transactional, the real estate agent's profession is based on a relationship of trust and proximity with customers.

### Active listening and understanding needs

To succeed in this profession, it's essential to listen to customers. This means not only hearing what they have to say, but also understanding their needs, desires and even fears. Real estate agents must be able to read between the lines to identify their customers' real expectations, often even before they fully express them. This active listening is the key to guiding customers towards properties that truly meet their expectations.

### Personalized advice

Every customer is unique, with specific needs and constraints. As a result, real estate agents must offer personalized advice, tailored to each situation. This may include suggestions on the type of property to look for, recommendations on which neighborhoods to favor, or advice on financing and loan options. The aim is to help customers make informed decisions, based on a complete analysis of their situation.

### Follow-up and support throughout the process

The real estate agent's role does not end with the signing of the sales contract. He accompanies his customers throughout the entire process, from the search for the ideal property to the finalization of the transaction, including the management of administrative and legal aspects. This follow-up is crucial to guarantee a positive, stress-free experience for the customer, and to ensure that every step runs smoothly.

### 3. Adaptability in a Constantly Evolving Market

The real estate market is one of the most sensitive sectors to economic fluctuations, legislative changes, and demographic shifts. This volatility demands a high level of adaptability from real estate agents.

### **Responsiveness to Market Trends**

A real estate agent must constantly stay aware of new market trends. Whether it's the emergence of new neighborhoods, changes in interest rates, or shifts in regulations, the agent must be able to react quickly and adjust their strategy accordingly. This responsiveness is essential to maintaining competitiveness in the market and providing clients with the best possible advice.

### **Ability to Anticipate Changes**

Beyond being reactive, a real estate agent must also be able to anticipate future market developments. This requires an in-depth analysis of economic data, an understanding of societal trends, and the ability to foresee the impact of public policies on the real estate market. Anticipating these changes allows the agent to guide clients toward smart and sustainable investments.

### **Innovation in Working Methods**

With the rapid advancement of technology, real estate agents must also be ready to adopt new working methods. This includes using digital tools for property promotion, client relationship management, and market data analysis. Innovation is key to staying competitive and meeting clients' growing expectations for services and responsiveness.

### 4. A Profession at the Intersection of Human and Technical Aspects

The role of a real estate agent is unique in that it combines both technical and human elements in an inseparable way. Unlike other professions where one aspect may dominate, real estate agents must constantly navigate between these two dimensions.

### **Technical Aspects**

The technical side of the job includes not only knowledge of real estate properties (architecture, construction, technical diagnostics, etc.), but also mastery of technological tools and marketing methods. A real estate agent must be able to assess the quality of a building, understand diagnostic reports, and use digital platforms to maximize the visibility of the properties they market.

### **Human Dimensions**

On the human side, a real estate agent often plays the role of advisor, mediator, and sometimes even psychologist. They must manage clients' emotions and expectations, resolve potential conflicts between buyers and sellers, and find solutions that satisfy all parties. This human dimension is what makes the profession both exciting and demanding.

### Conclusion

The profession of a real estate agent stands out from others due to the diversity of skills it requires, the depth of relationships it involves, and the adaptability needed to navigate an ever-changing market. This job demands a unique combination of technical expertise and human skills, making each workday different from the last. It is this complexity and richness that make the real estate profession distinct, offering exciting challenges and unique opportunities for those who choose to pursue it. Whether through negotiation skills, thorough knowledge of laws, or personalized client support, the real estate agent plays a crucial role in the property experience, making this profession as indispensable as it is distinctive.

What makes a real estate agent different from other professions?

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Real estate is a complex and dynamic business, involving many stakeholders: buyers, sellers, tenants, owners, agencies, and sometimes even public entities. At the heart of these interactions is the real estate agent, a professional whose role is to facilitate real estate transactions. However, this role is not limited to simply connecting the parties involved. The real estate agent is also bound by rigorous professional ethics. In this article, we'll explore in depth why ethics are absolutely essential in the real estate agent profession, and how they contribute to the longevity and success of this profession.

## Ethics: a fundamental pillar of the profession

In its simplest definition, ethics refers to the moral principles that guide the behavior of an individual or group. In the real estate profession, this includes transparency, honesty, integrity, confidentiality, and respect for applicable laws and regulations. These principles are not simply recommendations; they are essential to building and maintaining the trust of customers and the general public.

### 1. **Transparency in transactions**

One of the most crucial aspects of real estate ethics is transparency. Real estate transactions often involve considerable sums of money, and customers rely on their agent to guide them through this complex process. An ethical real estate agent must provide all relevant information about a transaction, including a property's defects, market conditions, and any potential conflicts of interest. By acting transparently, the agent ensures that all stakeholders make informed decisions, which is essential to avoiding disputes and building trust.

### 2. **Compliance with laws and regulations**

Real estate agents operate within a strict legal framework, which varies from region to region. Compliance with local, national and sometimes international laws and regulations is an essential aspect of professional ethics. By respecting these rules, agents protect not only their customers, but also their own reputation and that of their agency. Ignoring or failing to comply with regulations can result in severe penalties, including loss of professional license, fines, or even criminal prosecution.

### 3. **Honesty and integrity**

Honesty is the cornerstone of the relationship of trust between real estate agents and their clients. An agent must be honest not only in his words, but also in his actions. This means avoiding making promises they can't keep, exaggerating the advantages of a property, or downplaying its disadvantages. Integrity, on the other hand, implies doing what is right, even when this may not be in the agent's personal interest. For example, an agent may have to advise a client not to buy a property which, although financially advantageous to the agent, may not meet the client's needs.

### 4. **Confidentiality of information**

In the course of their work, real estate agents have access to a great deal of personal and sensitive information about their customers. This includes financial data, family information, and sometimes even long-term life plans. Respecting the confidentiality of this information is not only a legal obligation, but also an ethical duty. Unauthorized disclosure of this information can not only lead to legal problems, but also seriously damage the trust between agent and customer.

## The consequences of a lack of ethics

A breach of ethics can have disastrous consequences, both for the real estate agent and for the profession as a whole. Customers who feel betrayed or badly advised may not only withdraw their trust, but also take legal action against the agent or agency. What's more, bad practices can tarnish the image of the entire profession, leading to a widespread loss of public confidence.

### 1. **Loss of customer confidence**

Trust is a key element in any professional relationship, and this is particularly true in real estate. Customers need to be able to rely on their agent to provide honest and accurate advice. If an agent is perceived as unreliable or misleading, customers are unlikely to return to them or recommend them to others. Once trust is lost, it is extremely difficult to regain, and this can have a direct impact on the agent's career.

### 2. **Damage to professional reputation**

Reputation is one of a real estate agent's most valuable assets. In an industry where word-of-mouth and referrals play a crucial role, a bad reputation can be devastating. Agents who act unethically can quickly find themselves excluded from the market, as customers and partners will avoid working with them. What's more, ethical scandals can attract negative media attention, which can make the situation even worse.

### 3. **Impact on the profession as a whole**

When real estate agents fail to behave ethically, it not only damages their own careers, but the profession as a whole. Unethical behavior can fuel public distrust of real estate agents, reinforcing negative stereotypes and making the job harder for professionals who play by the rules. For this reason, it is in the interest of all real estate agents to promote and maintain high ethical standards within the profession.

## Ethics as a sustainable success factor

Ethics should not be seen as a constraint, but as a long-term success factor. A real estate agent who adopts an ethical approach to all his or her transactions is more likely to build a solid and lasting career. By building a reputation for reliability, honesty and transparency, the agent not only attracts new customers, but also benefits from the loyalty of existing ones, who are more likely to recommend him or her to their friends and family.

### 1. **Customer loyalty**

A satisfied customer is a loyal customer. By acting ethically, a real estate agent ensures that customers feel well advised and secure throughout the buying or selling process. This satisfaction often leads to referrals, which are a valuable source of new business in the real estate sector. Customer loyalty is achieved not only through successful transactions, but also through the way in which these transactions are carried out.

### 2. **Market differentiation**

In a competitive real estate market, ethics can be a major differentiating factor. Customers are increasingly aware of the importance of working with professionals of integrity, and are willing to pay for a service they feel is honest and transparent. By emphasizing ethics in its marketing and professional interactions, an agent can set itself apart from its competitors and attract quality clientele.

### 3. **Career longevity**

Finally, an ethically-based real estate career is one that is likely to last. Agents who adhere to ethical standards are less likely to face lawsuits, fines, or professional sanctions. What's more, they build a loyal and satisfied customer base, which ensures a steady flow of new business. In short, ethics are not only essential to maintaining public trust, but also to ensuring a long and prosperous career.

## Conclusion

Ethics are more than just a code of conduct for real estate agents; they are central to their professional success and to the sustainability of the profession as a whole. By adhering to rigorous ethical principles, real estate agents protect not only their customers, but also their own reputation and that of their industry. In a market where trust is paramount, ethics are the key to building long-lasting, prosperous relationships. Ultimately, an ethical real estate agent is not only a better professional, but also a pillar on which the credibility of the entire real estate industry rests.

Why are ethics essential in the real estate profession?

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Selling a property in Luxembourg requires meticulous preparation to ensure a successful transaction and optimize the value of your property. Here is a detailed guide to help you prepare to sell your property in Luxembourg.

## 1. Evaluate the value of your property

The first step in selling your property is to know its value. Consult a real estate expert for an accurate appraisal. You can also check the prices of similar properties in your area to get a general idea of the market. A realistic evaluation attracts more buyers and reduces the selling time.

## 2. Gather the necessary documents

Prepare all the essential documents needed to sell your property. This includes:

- The property title
- House plans
- Energy Performance Certificates (EPC)
- Recent work invoices
- Condominium fee statements (if applicable)
- Mandatory technical diagnostics

## 3. Improve the appeal of your property

To maximize potential buyers' interest, ensure that your property is in excellent condition:

- Depersonalize: Remove personal items to allow buyers to envision themselves in your home.
- Repair: Carry out necessary repairs (painting, leaks, etc.).
- Clean and Declutter: A clean and tidy house is more attractive.

## 4. Showcase your property

Home staging is an effective technique to enhance your property's appeal. Hire a professional to arrange your interior in a way that attracts the most buyers. A good presentation can significantly increase your property's perceived value.

## 5. Choose the right time to sell

The real estate market experiences seasonal fluctuations. Generally, spring and autumn are the best times to sell. However, Luxembourg's market is dynamic, so it is possible to sell year-round. Consult a real estate agent to determine the ideal time.

## 6. Set a competitive price

A price that is too high can discourage buyers, while a price that is too low can cost you money. Based on the initial evaluation and market conditions, set a competitive price to attract offers quickly.

## 7. Advertise your property

Use various channels to promote your property:

- Online Listings: Post on popular real estate sites in Luxembourg.
- Social Media: Share your listing on Facebook, Instagram, etc.
- Real Estate Agencies: Collaborate with an agency to benefit from their network and expertise.
- Signs: Place a "For Sale" sign in front of your property.

## 8. Prepare for visits

Visits are crucial to attract potential buyers. Ensure your property is impeccable:

- Schedule visits at times when natural light showcases your home.
- Be available to answer visitors' questions.
- Provide clear and precise information about your property and the neighborhood.

## 9. Negotiate with buyers

Be prepared to negotiate. Buyers will likely make an offer lower than your asking price. Stay flexible and open to discussion to reach a mutually beneficial agreement.

## 10. Close the sale

Once you have accepted an offer, a Luxembourg notary will finalize the sale. They will draft the sales agreement and ensure all legal conditions are met. After signing, a date will be set for the official signing of the sale deed.

## Conclusion

Selling a property in Luxembourg requires rigorous preparation and a good understanding of the real estate market. By following these steps, you maximize your chances of selling quickly and at the best price. For professional assistance, do not hesitate to contact a real estate agency that will support you throughout the process.

Preparing to sell your property in Luxembourg: A comprehensive guide

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The number of transactions has been increasing for the second consecutive quarter, and signs of an imminent recovery are becoming more apparent. Buyers are actively searching for opportunities to become property owners. Regarding prices, we observe stabilization at the national level, with decreases ranging between 10% and 30% depending on the commune. Although this drop does not entirely offset the increase in credit costs, the expected upcoming rate reductions should help achieve the much-anticipated balance.

## What profile do you need to obtain a housing loan on the best terms?

To secure a housing loan on the best terms, certain requirements remain essential: stable employment and a consistent income that is three times the credit repayment costs are primary conditions. Additionally, a substantial down payment can sometimes be a decisive factor. The energy efficiency rating of the property also plays an important role in credit rates. For example, a property with an A rating will benefit from a lower interest rate compared to a property with a D or E rating. Properties with an A rating are scarce, so their value is likely to be preserved. Conversely, properties with low energy efficiency will need to be renovated to improve their energy performance and maintain their value.

## Seasonal dynamics influenced by holidays

The weather this year has not been kind to Luxembourg residents, making the approach of holidays even more eagerly anticipated. The school year has ended, and the last affairs to settle precede the much-deserved holiday departures. Upon their return, the activity in real estate searches is expected to intensify, with the goal of finding a home or family nest. The market still offers a varied selection, and quality properties can sometimes be sold at fair prices.

## Transparency and market Information

To ensure transparency, we now display in each sales listing, provided we have reliable data, price statistics and their projections, as well as the positioning of the listing in the market. The time has come to finally find your ideal property and anchor yourself in Luxembourg.

Don't hesitate [to contact us](https://nextimmo.lu/en/contact) for any additional information or to start your search today.

Toward a real estate market recovery by fall?

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### Why taking out a variable-rate home loan now may be a good idea (and converting to a fixed rate later) 😃

In this month of June 2024, variable interest rates for home loans are higher than fixed rates. At first glance, choosing the more expensive option may seem counterintuitive, but there are valid reasons for doing so! Here's why:

#### 1. *Interest rates could go down 📉*

Although variable rates are high at the moment, it's possible that interest rates could fall in the medium term. By choosing a variable rate today, you could benefit from this future drop. Then, you can convert your loan to a fixed rate at a more opportune time, and save money over the long term.

#### 2. *More flexibility 🔄*

Variable-rate loans often offer greater flexibility for prepayment and modification of loan conditions. This flexibility is very useful when rates are high, as it allows you to adjust your loan according to your financial situation and market conditions.

#### 3. *Manage risks 🛡️*

By carefully monitoring market rates, you can decide when is the best time to convert your loan to a fixed rate. This allows you to minimize the risks associated with interest rate variations and take advantage of the best possible conditions.

#### 4. *Long-term savings 💸*

Even if variable rates are more expensive now, you could make significant savings by switching to a lower fixed rate later. This requires close monitoring of the market and careful planning, but the potential savings are well worth it.

#### 5. *Refinancing opportunities 🔄*

By choosing a variable rate today, you open yourself up to interesting refinancing opportunities in the future. If rates fall as expected, you'll be able to restructure your loan on more advantageous terms, which can improve your overall financial situation.

#### Conclusion 📊

Although variable rates are currently higher, they offer flexibility and potential opportunities that can be advantageous in the long term. By monitoring rates and planning carefully, you can reap the benefits of both types of rate. Don't forget to consult a financial advisor to choose the best strategy for you and optimize your finances!

In short, with a little vigilance and strategy, you can turn a seemingly unfavorable situation into an advantageous financial opportunity. Take advantage of this flexibility to optimize your finances! 😊

Why take out a variable-rate loan?

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The Housing Observatory has just published its 10th analysis report, providing a comprehensive overview of the residential real estate market in the first quarter of 2024. Here are the key points:

## A Still Weak Sales Market

The real estate transaction market remains sluggish, especially for new constructions. The sales volume is significantly lower than the levels seen before the late 2022 housing crisis. In the first quarter of 2024, only 92 sales were recorded, representing a 47.1% drop compared to the same period in 2023, and seven times fewer than the average of previous years (2017-2022).

Sales of apartments under construction have not been offset by purchases from the State or the City of Luxembourg, despite their announced acquisitions of projects from private developers. However, sales of existing apartments have slightly rebounded with a 24.5% increase compared to the first quarter of 2023, although activity remains below the pre-crisis average.

## Stabilization of Sale Prices

Sale prices are beginning to stabilize. The hedonic price index provided by Statec shows a minimal variation of -0.3% between the fourth quarter of 2023 and the first quarter of 2024, after a 10.9% drop over the previous year. This stabilization trend is observed in both apartments and existing houses, the latter having lost 14.7% of their value compared to the first quarter of 2023.

Prices of apartments under construction (VEFA) also fell by 2.3% this quarter compared to the fourth quarter of 2023. However, fluctuations in this segment remain volatile due to the low number of transactions.

## Stable Rents

After several quarters of significant increases, rents for apartments with new leases have stabilized since the second quarter of 2023. Over the past 12 months, rents have only increased by 1.5%, a rise lower than the consumer price index (+3.2%) over the same period. This moderation is likely due to tenants' inability to absorb large rent increases despite growing rental demand.

A notable exception is rents for furnished rooms, which currently represent 15% of the total rental offer, having increased by 4.5% compared to the first quarter of 2023, well above the inflation rate for consumer goods.






State of the Real Estate Market in the First Quarter of 2024: Summary and Trends

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**An exclusive interview with Irfan Babacic, one of Luxembourg's leading real estate developers**.

**Interviewer: Rudolphe Aben, founder of Nextimmo.lu**

**Rudolphe Aben:** Good morning, Irfan Babacic. Thank you for taking the time to speak with us today. As Luxembourg's leading real estate developer, your outlook on the real estate market is invaluable. Let's get straight to the heart of the matter. You recently made some bold predictions about the real estate market between now and the end of 2024 and in 2025. Can you explain why you think the market will rebound by the end of this year?

**Irfan Babacic:** Hello, Rudolphe Aben. I'm delighted to be here. Yes, I'm convinced that the real estate market will pick up again towards the end of 2024. One main reason is the expiry of government subsidies. Historically, we've seen similar patterns, for example at the end of 2008. At that time, the end of government subsidies and the subsequent market adjustment led to a significant increase in demand and property prices.

**Rudolphe Aben:** Can you explain this in more detail? Why do the expiry of subsidies lead to a rise in the real estate market?

**Irfan Babacic:** Of course. When government subsidies come to an end, there's often a sense of urgency among buyers and investors trying to take advantage of the last benefits before they disappear. This leads to a temporary increase in demand. At the same time, markets adjust to the new reality without subsidies, which often has a stabilizing effect. People have more confidence in market dynamics because they are no longer influenced by artificial interventions.

**Rudolphe Aben:** That's very interesting. You also mentioned that you think the market will be much better in mid-2025 than in 2023. What factors explain this optimism?

**Irfan Babacic:** There are several factors. Firstly, the market correction caused by the expiry of subsidies will be fully digested by then. Secondly, we expect interest rates to fall, which will reduce financing costs for buyers and investors. At the same time, significant wage increases in Luxembourg will increase purchasing power and make real estate more affordable. Thirdly, Luxembourg's population continues to grow, increasing demand for housing. These combined factors will stimulate the market and lead to a recovery. We see great potential in VEFA (vente en état futur d'achèvement) as buyers and investors regain confidence in the market and are ready to invest in new projects.

**Rudolphe Aben:** That sounds promising. Can you tell us a little more about VEFA and its importance for the real estate market?

**Irfan Babacic:** Of course. VEFA, or vente en état futur d'achèvement, is a very attractive option for buyers and investors. It enables them to buy properties still under construction, often at a lower price than for finished properties. This type of sale also offers developers a secure method of financing, as they receive advance payments. In times of market growth, such as we expect in 2025, VEFA becomes particularly attractive, as buyers can benefit from future increases in value.

**Rudolphe Aben:** Thank you very much, Irfan Babacic, for these detailed and enlightening explanations. Your companies are currently investing expansively. Can you explain why you're entering this expansion phase now?

**Irfan Babacic:** Of course. The market is currently in a recovery phase after a prolonged period of stagnation. We see this as a strategic opportunity to invest before prices rise significantly. By investing early, we can benefit from lower prices and be ready when the market has fully recovered and demand increases. It's a long-term strategy based on our belief that the market will recover sustainably.

**Rudolphe Aben:** Wise words. Thank you very much, Irfan Babacic, for being with us today and sharing your perspectives.

**Irfan Babacic:** Thank you, Rudolphe Aben. It's been a pleasure.

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### About the author:

Rudolphe Aben is the founder of Nextimmo.lu, a leading hybrid real estate platform/agency. He works closely with many former competitors, who have become his partners. With years of experience in assessing market trends and advising investors, he writes regularly for leading Luxembourg trade magazines and lectures at real estate conferences.

### About Irfan Babacic:

Irfan Babacic is a well-known figure in the real estate sector and acts as leader and founder of several major real estate development companies in Luxembourg. He has extensive experience in real estate and is particularly well known for his work in participatory financing and project management. His companies are currently investing expansively, as he is convinced that the market is in a recovery phase and that now is the right time to invest.

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