Ventes aux Enchères: Going Once, Going Twice, Sold!
French Property Insider Volume XIV, Issue 45 Thursday, November 17, 2016 • Paris, France
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One of our clients discovered an apartment in their own building up for auction and thought it might be a good opportunity for a smart investment. They are familiar with the building, building by-laws and the neighbors. It all makes sense.
The Chambre de Notaires has a special site to announce the properties on auction, the auction dates, as well as reporting on past auction results. See notaires.paris-idf.fr/immobilier/ventes-aux-encheres for this information. They also publish a brochure of the properties on auction. Read the PDF for the auctions held this month.
Visits of the properties on auction are scheduled in advance as indicated in the ads. We took the opportunity to visit the apartment in their building to determine if it was worth an investment or not. While needing complete renovation (and then some!), it still looked like a good bet, all based on the what the final selling price will be during the bidding process.
If you have a property to place on auction, your Notaire can assist you. There are also Notaires in France who specialize in these types of sales. The Notaire will advise you, help you select an opening price (usually about 75% of the value of the property), register the property with the authorities, prepare the documents, advertise the sale and manage the visits. Allow three months to accomplish all this.
The Notaire will also provide a "Cahier des charges," which sets out all the conditions of sale, the sale procedure that will be adopted, together with a description of the property -- much more than you would normally see in an estate agents particulars. It will state the reserve price, visit arrangements, and rules of participation. As a buyer, it is important to fully understand the details of the property, and any encumbrances that may be attached to it, as well as the proposed sale procedure. The property is being sold "as is," without any guarantees on its condition.
On the day of the sale, your Notaire meets the bidders and as a buyer, you must be prepared to bring along a cashier's check for the "consignation" or deposit, as noted on the ad. You will be registered as a bidder and having paid the deposit to allow you to make your offers. There is an opening or starting price. Of course, the highest bidder wins the property. If you are not a successful bidder, your check is returned to you.
The purchaser has 45 days to pay for the property in full. You can arrange for financing in advance and provide this information to the Notaire, but a post purchase mortgage is possible within the six months that follow the purchase for up to 70% of the purchase price. There is no contingency for the mortgage possible with a sale of this kind and there is no "cooling off period." You buy as is and you are committed to the purchase. However, within 10 days of the sale, another buyer can make a higher bid no less than 10% above the first selling price.
The auctions in France use a system of "les bougies" or candles. This is a traditional system of timing the bidding for each property, "to give everyone a fair chance." One main tall candle is lit. When the bidding stalls, the auctioneer calls for another candle to be lit. This is actually a wick, which burns for just a few seconds, lit from the main candle and placed in a two-candle candelabra. If no further bids are made by the time the wick burns out a second one is lit, and he calls out "dernier feu!" Literally, "last fire." If no one makes a bid before that wick goes out the bidding is closed on that property. If a bid is placed before either of the two wicks go out, the process starts over again.
The sales happen very quickly. If "you snooze, you lose" as it takes only three or four minutes to auction off each of the properties. While these auctions can be a good alternative method of buying a property in France, even for foreigners, there are a few things to keep in mind. In addition to the final cost of the property and the Notaire fees, you will pay fees to cover the costs of the auction and its promotion. The deposit, of course, is applied to all this (if you are not successful in your bid, your deposit check is returned to you that day).
While buying on auction can be a very good way to "get a deal" on a valuable property, it comes with a level of risk. If you are willing to take that risk, you can benefit greatly, but don't do it without assistance from professionals!
Additional information on Les ventes aux Enchères des Notaires can be found on the Notaire's Web site (in French). Our office and our Notaires can assist you!
P.S. Don't miss our newest House Hunters International episode "Paris With A Texan Accent" which airs Tuesday Nov 22 10:30pm ET|9:30 CT Wednesday Nov 23 1:30am ET|12:30 CT. After discovering she had familial ties to Paris, Texan Janet wanted to plant roots in her ancestral home. Michael supports Janet's dream, but he's nervous about buying a second home in pricy central Paris... Let us know what you think!
P.P.S. There will be no French Property Insider issue on Thursday, November 24th, for Thanksgiving! We'll be busy eating turkey! Hope you will be, too.
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