Tips for Finding and Buying
An Affordable French Chateau

Maybe it's on an afternoon stroll through Paris's leafy Luxembourg Gardens or on a bike ride through the vineyards of Bordeaux. Many tourists to France experience it: the aha moment when they think, "Wouldn't it be lovely to live here?"

With housing prices in Paris, provincial cities and the countryside having hit new heights in the past few years, the idea of owning a vacation or retirement property in France might seem far-fetched. Gone are the days of the $5,000 farmhouse.

But with a little inside knowledge and a lot of perseverance, you can still find that chateau away from home. Just ask Jonathan Petherick. In January, the 51-year-old insurance consultant from Warrington, England, and his wife paid €130,000 (around $165,000 at current rates) for a four-bedroom house in Franseches, about an hour southwest of Limoges, in the region of central France known as Limousin.

"We fell in love with a 200-year-old house with six marble fireplaces in a tiny hamlet of seven houses," Mr. Petherick says. "The area around Limoges is still really cheap. It's the last area where foreigners haven't bought up everything."

Mr. Petherick's point may be overstated, but clearly France remains a magnet for home buyers from around the world.

"Even though prices have risen dramatically, we haven't seen a dip in the number of foreigners buying properties," says Sophie Berdah-Vallée, director of My Home in Paris, a Paris-based agency that helps customers, primarily foreigners, buy apartments in Paris and on the Côte d'Azur. She says Paris is now almost as expensive as New York for many foreign buyers, due to the strength of the euro. Still, American, Russian, British, Japanese and other buyers keep knocking on her agency's door.

Before diving into la vie française, it helps to know the basics of buying property in France. And also where to look. Here's a thumbnail guide.

Not Just Paris

There are still bargains to be had beyond Paris, especially in up-and-coming areas like Burgundy, Alsace, Brittany and Poitou-Charentes, an area of rolling green hills west of the Loire Valley.

In March, Nicholas and Val Weston, both 57, paid €300,000 for a 300-year-old farmhouse in Loches, a village in the Indre et Loire region south of the Loire Valley. The three-bedroom home is on an acre of land with manicured gardens.

"We spent a lot of time researching the area and came over prepared with a list of 15 houses we had found on the Internet," says Mr. Weston, a retired teacher from Newcastle, England. "We probably paid a bit over the odds, but we fell in love with the courtyard planted with roses and the vegetable garden."

In the Limousin region, meanwhile, a host of properties are for sale at bargain-basement prices; a country house there was recently listed for €15,000 on an Internet property site. But the region is cheap for a reason -- most locals find it boring and remote.

"The area around Limousin is somewhat the back of beyond, and French people hate it, but foreigners find it traditional and charming," says Bob Murray-Jones, owner of SMJ Immobilier, a real-estate agency based near Poitiers.

Geographical preferences aside, where you decide to buy a second property depends on how you plan to use it. If you plan to spend a good portion of your time in France after retirement, it doesn't matter so much if your country house is far from a major city or doesn't have an airport nearby. But if you plan to use your house or apartment just a few weeks a year and to rent it out the rest of the time, choose a location with appeal and convenience for tourists.

Becoming an Owner

Buying property in France doesn't have to be complicated, especially since there are dozens of real-estate agencies, mortgage brokers and banks that cater almost exclusively to foreigners. These agents can be a big help if you don't speak French, and many organize the entire buying process, from visiting properties to signing the final sale agreement to meetings with lawyers over inheritance-law issues. Some even do your furniture shopping for you. Real-estate agencies that serve mainly a local clientele, too, are becoming increasingly adept at dealing with non-natives.

When searching, it's important to remember there is no equivalent to the Multiple Listing Service used by most real-estate agents in the U.S. An agent will usually suggest properties to you, but it's also important to pound the pavement and do your own research.

Properties are listed with agents directly, or on Web sites and in newspapers, like Particulier à Particulier, a leading journal for real-estate rentals and sales. This weekly publication, available on the Web at www.pap.fr, is something of a real-estate bible in France that people love to hate. Some critics think sellers in the PAP inflate their prices since they are removing the middleman -- the real-estate agent -- from their transactions. Most property sales involving an agent tack a 5% to 10% fee onto the price -- paid by the buyer -- but that fee can vary wildly. Some agencies catering to foreigners charge fees upward of 20%.

Nor are agencies the only parties that tack on fees. Buyers must pay a fee of about 8% to the notaire, a licensed official who, as required by law, arranges all of the formal documents in the sale. Then there is the mortgage fee, paid to the lender, which is usually 1% to 2% of the sale price.

The Pethericks ended up paying €12,000, or about 9% of the total price of their home, to their real-estate agent -- a fee that Mr. Petherick says was nothing less than "exorbitant," considering "he basically did nothing, just showed us the place we had already found on the Internet." They also paid a notaire's fee of €8,900, or nearly 7%, and a mortgage fee of €1,400.

Once you have decided on a property, the first step is to sign a promesse de vente, or promise of sale, in the presence of the notaire. The buyer puts down a deposit of 10% of the asking price at this time, and the seller agrees not to sell the property to anyone else during a three-month period. If you get cold feet, you've got one week to back out of the deal and get the 10% deposit back. During the three-month escrow period, the buyer must arrange financing for the deal.

If you're looking to take out a mortgage, this must be declared at the signing of the promesse de vente. Foreigners normally are required to take out a mortgage with a bank in France, but according to Carole Bayliss, founder of MortgageFrance.com, a mortgage broker based in Paulmy, in the Loire Valley, several banks cater largely to non-French customers. These lenders include UCB, a subsidiary of BNP Paribas SA, and GE Money Bank, a Roswell, Ga., unit of General Electric Co. that operates banks in dozens of countries world-wide.

Those who are used to getting approved for a mega-mortgage with little more than a decent credit report should be aware that French banks are cautious when it comes to lending. They usually require nonresidents to put down 15% to 20% of the purchase price and won't lend for a period longer than 20 years. Some even ask for proof that you're healthy. Before closing on an apartment in Paris in 2003, Jonathan Rome, a 56-year-old retired corporate-events planner from San Francisco, and his wife had to get medical exams; otherwise, the bank wouldn't approve their loan.

"We had to get a blood and heart test to prove we weren't going to die," says Mr. Rome. And that was after putting down 20% in cash on a 15-year mortgage of €500,000.

Once financing is secured, the buyer and seller sign the acte de vente, or the final contract. The buyer pays the balance of the purchase price and becomes owner of the property. That's when the real work begins for many buyers: renovation.

"Everyone wants a wreck to fix up," says Ms. Bayliss, who says buyers often include renovation costs in the mortgage amount upfront.

Buyer Beware

Stepping downstairs in Paris for croissants or picking grapes in your own private Provençal vineyard may seem like paradise, but it's important to be realistic about owning property in France.

Many experts believe prices are set to stagnate or fall in coming years, so buying may be risky if you don't plan to hold onto the property for five years or more.

"The bubble is beginning to pop," says Mr. Murray-Jones of SMJ Immobilier. "There are going to be a lot of sob stories if people try to sell their second homes in the next few years." To add to the pain, when selling a property in France, you'll be hit with a 30% capital-gains tax if you aren't a permanent resident.

Of course, many families say selling is the furthest thing from their minds. Brian and Ula Parker, retirees from London, bought a two-bedroom apartment in Paris's 9th arrondissement three years ago. With the two cities less than three hours apart by train, the couple's Paris residence rarely sits empty.

"Sure, it was expensive," says Mr. Parker, 67, a retired medical publisher. "But Paris is an indescribably beautiful city, and you can't put a price on that."

Email your comments to rjeditor@dowjones.com.