Real estate auctions are little known. However, they can prove to be interesting, as long as one is correctly informed of the very specific rules governing this mode of purchase.
There are different types of real estate auctions. There are three supply chains for auctions, each with its own set of specific features.
Notarial real estate auctions
Notarial sales take place in the chambers of the notaries’ department. To participate, you must give the notary in charge of the sale at the start of the session, a cashier’s check, called a deposit check. Its amount is equivalent to 10 to 20% of the price of the property. Note that this sector being the best known, it is not the one that allows for the best deals.
INTERNET AUCTIONS
Today, you can participate in real estate sales on the internet and bid in complete safety! After registering for a sale, you will receive an electronic approval and a password. You will have access to the specifications of the property online, and at the end of the sale the procedure continues as a traditional transaction.
State property at auctions
The State regularly sells rather singular goods: barracks, stations, land. The rare dwellings put up for sale by the State constitute property resulting from ” vacant estates “, namely that they had no heirs. These sales take place in departmental prefectures or tax hotels. To participate in these sales, you do not need to register in advance. All you have to do is show up on the day of the sale with the required documents, and any bid higher than € 7,500 requires the deposit of a consignment check representing 5% of the bid. The advantage of state-owned sales is that no notary fees are charged and the deed of sale is drawn up free of charge.
Legal real estate auctions
Judicial sales arise from judicial foreclosures, compulsory liquidation or divorces. These sales take place in the Courts of First Instance (TGI). This is the only channel that requires the use of a lawyer to participate in the session. He alone is authorized to carry the auctions on your behalf. You will therefore have to give him a signed mandate on which your limit bid appears, as well as the deposit check for 20% of the amount of the initial bid. Note that this is the channel that allows the most interesting deals.
GOOD TO KNOW
The starting price is generally set at 30% below the estimated price. This discount allows for good business before the final price reaches market prices.
An auction is getting ready …
Watch out for visits: they are already scheduled
You will naturally want to visit the property you want. To do this, know that you must make yourself available, because the dates and times of visits are determined and imposed by the person in charge of the sale. Usually two or three tours are arranged to allow interested people to get to the scene at a convenient time, but tours usually take place during the week and during the day – be flexible!
Do not neglect the specifications of Real estate auctions
Remember to carefully consult the specifications. You will thus be able to take note of key information: the costs to be borne by the purchaser, the time limit for payment of the price, as well as the characteristics of the property: description, surface area, easement, co-ownership charges, etc.
Make an appointment with your bank, even if it is not mandatory
Note that unlike a classic purchase, that of a property auctioned is not conditional on obtaining a mortgage. However, if you become the purchaser of this property, you will not be able to obtain the cancellation of the sale under any circumstances, and you will necessarily be liable for its price. It is therefore more prudent to check with your bank in order to establish a financing plan and thus know the maximum amount not to be exceeded on the day of the auction. To define this amount, do not only take into account the purchase price of the property because other costs are added to it:
- The costs of putting up for sale: these are the costs generated by the preparation of the auction, but also the costs of advertising and organization of the auctions.
- The notary’s fees: for notarial and judicial sales, in the application of the national scale regulated by a decree of the Council of State.
- Disbursements: sums advanced by the notary as part of the processing of the file.
- Purchase costs: these are transfer duties and taxes intended for the Public Treasury.
How does the session of an auction take place?
To begin with, you must bring several documents to attend an auction session: a cashier’s check for the deposit, proof of identity, and proof of address. Afterward, you will be given a numbered badge that allows you to identify yourself during the auctions. Of course, this rule applies to your lawyer at a court auction. If you become the purchaser of the property put up for sale, you will sign the deed of sale at the end of the session. On the other hand, if you did not win the auction, you will recover before leaving the deposit check that you had given at the beginning of the session.
TIPS
If possible, attend one or two “blank” auction sessions to familiarize yourself with the process and the atmosphere, before you participate in a sale yourself.
What happens after the sale?
On the day of the meeting, if you have become the purchaser of the property, consider insuring it immediately. Once the auction is over, you do not immediately own the property, because, within 10 days of the sale, it is still possible to overbid by 10% of the price of the property, except for state sales. After this 10-day period, you are liable for the balance of the price within 30 days of the sale for state sales, within 45 days for notarial sales and within 60 days for legal sales. Beyond the time limit, penalties are imposed and increased beyond 75 days. During the period-specific to the purchase process for your property, you will therefore have an appointment with the notary.in order to pay the balance of the price. It is at the end of this meeting that the notary will give you the keys to the property and that you will officially be the owner.
KEY POINTS TO REMEMBER
- Prepare well before the session: organize yourself to visit the property, read the specifications and, although this is not mandatory, it is recommended to consult your bank in order to establish a financing plan.
- You do not own the property until 10 days after the session if no one has outbid.
- You have a legal period of 30 to 60 days following the sale to pay the balance of the price.