Real Estate Auctions: how to use
The property you want to acquire is for sale at real estate auctions.
It really interests you and corresponds to your criteria, but you are a bit lost, you do not know very well how this type of sale takes place, the procedure to follow, what will be the price to pay and especially the overall cost of this sale. You cannot project yourself and you are ready to abandon this property in which you are already projecting yourself.
To help you in this process, we will detail the important points and the procedure to follow below.
But before that, it is necessary to determine what type of auction is. Indeed, there are different auctions and depending on the type of auction the procedure will not really be the same. But just what an auction is about, where the goods come from, how to get all the information and how the visit goes.
Definition:
An auction or sale by auction is a public sale resulting in the award of the property to the highest bidder.
The successful bidder is the person who purchased a moveable or immovable property through an auction or auction, after having made the highest bid.
There are three main categories of real estate auctions, each with its own distinct characteristics:
1. Notarial real estate sale:
Organized by a notary at the request of a customer, this sale involves the owner establishing a minimum reserve price for the sale. Prospective buyers must submit a consignment check to participate in the auction.
2. The sale of state-owned real estate:
Organized by the State, this sale concerns atypical properties such as land or buildings from barracks, schools or other public infrastructures. The amount of the consignment check is generally lower, and there are no notary fees to anticipate.
3. Judicial real estate sale:
Resulting from a seizure, a judicial liquidation procedure or a divorce, this sale requires the intervention of a specialized lawyer. The deposit amount generally corresponds to around 20% of the initial price.
It is crucial to note that the auction process remains similar, regardless of the type of real estate auction. However, by understanding these different real estate auction categories, you will be better prepared and informed the next time you participate in this type of event.
1°/ In judicial real estate auctions, the goods come either from:
- Of a real estate seizure:
In order to repay debts owed by a person, a procedure for selling the property to the Court can be set up either by the bank (Failure to repay the mortgage) or by the trustee of co-owners (payment of expenses due).
- Of a judicial liquidation:
A company's liquidator may decide to sell the company's buildings at auction to pay off the company's debts.
- Judicial division:
As a result of a conflict and a disagreement over the division of assets resulting from an inheritance, or a divorce, people can request an auction of real estate, to recover their cash shares.
2°/ In the amicable real estate auction:
The goods (all types of property, house, apartment, apartment, building, office etc...) at real estate auctions come from:
- Individuals who prefer this method of sale to the more traditional way of selling through a real estate agency or a website.
- Or from the Domain Administration (sales organized by the State or public organizations, which relate to very specific properties (abandoned estate, barracks, gendarmerie, lighthouse, lighthouse, official housing, etc...).
How do I get all the information about the property sold?
Whether the sale is judicial or amicable, a specification is first drawn up that includes all the necessary information and elements: the Description of the property, the origin of ownership (how the seller became the owner), the name of the notary who received the act, the easements, the mandatory diagnoses, the descriptive state of division and the regulations of the condominium, the trustee and the trustee's documents, etc.
It is very important to consult this document, it will provide you with all the information on the property sold and will subsequently form part of your title act.
How to visit the property?
Visits generally take place in the weeks leading up to the sale. They are collective, on fixed dates and times. You have to make yourself available, the visits take place for two to three days. Auctions, or auctions by auction, take place under specific, highly supervised conditions, which are best controlled before embarking on this type of purchase.
That is why we are going to detail the process of real estate auctions, from your visit to the property until the day you definitively become the owner.
I — Judicial auction
The judicial auction procedure takes place at the bar of the High Court, in the “Auction House”. Anyone who wants to bid can attend the hearing, but must be represented by a lawyer.
1°- Preparing for the sale
The dates of judicial auctions are pre-advertised in the department's legal advertising newspapers and at the courthouse at least one month prior to the scheduled hearing date.
These ads provide all the details on the type of property sold, the description, the amount of the price taken, the date and time of the sale, the conditions of the visit of the property, the conditions of the sale, including expenses, and the contact details of the lawyer in charge of this file.
2°- Consignment
Participating in judicial real estate auctions requires strict compliance with certain procedures. In the case of judicial sales, it is not possible for individuals to bid personally during the procedure. Instead, it is essential to use the services of a qualified lawyer who is registered with the competent jurisdiction.
This lawyer plays a central role in facilitating your participation in the auction. To ensure the smooth running of the process, the lawyer will check your eligibility and financial capacity before proceeding. Once approved, the lawyer will request a written and signed mandate, giving them the authority to bid on your behalf, with a pre-determined maximum limit. In addition, you will need to provide a security check, which should not exceed 10% of the maximum bid stipulated in the mandate.
To cover the legal costs associated with the auction, it is necessary to settle the required fees with your lawyer before the auction starts. By following these meticulous steps, you can confidently engage in the auction process and explore the potential opportunities that judicial auctions offer.
3°- Conduct of the auction
When approaching the world of real estate auctions, the process follows a framework similar to that of amicable auctions or those orchestrated by the domain administration. This approach ensures a familiar and effective procedure for buyers. However, it is important to highlight the exceptional diversity of properties available at these auctions.
What makes these auctions really special is the variety of unique and unconventional goods on offer, such as warehouses, hangars, even lighthouses. They represent an exceptional opportunity to explore and, potentially, acquire such extraordinary spaces. This alternative offering significantly broadens the horizons of your real estate search, presenting a whole new domain of apartments and homes to explore and customize according to your personal tastes and preferences.
So, even if you think you've explored every facet of your local market, these auctions open up a whole new pool of possibilities to discover and consider. It's a unique opportunity to go beyond conventional choices and embrace the fascinating diversity of the real estate market.
If you offered the highest price, you will be declared the successful bidder at the end of the auction and a written record of the auction will be prepared in your name. This report serves as proof of ownership, marking an important step in the process. However, it is important to be patient as your property is not yet fully established. It is still possible for another person to make a higher bid within ten days after the auction, which is known as the “ten percent bidding” procedure.
Once you are definitively declared the successful bidder, the written minutes of the auction must be published to the land agency by your lawyer, along with the terms and conditions of the sale. These two documents constitute your title document. This formality is crucial, as it ensures that your acquisition is legally binding and enforceable against anyone.
It is important to note that this auction judgment must be published within the legal deadline; otherwise, the sale will be cancelled, and the property will be put up for auction again. However, the publication of this judgment can only take place after payment of the price has been made. Pay attention to the legal deadlines and make sure you respect all the conditions to ensure the validity of your acquisition.
In the absence of an auction, it is the pursuer (the creditor, for example) who is automatically declared the successful bidder of the property, at the price corresponding to the initial price.
4° - Payment of the price
In a judicial auction, even if you borrow to be able to finance your purchase, you cannot benefit from a suspensive credit condition (Scrivener law) and you are obliged to pay the auction price within the period agreed in the specifications.
This does not prevent you from taking the steps to obtain a loan but in case of refusal of a loan, you are still obliged to pay the price. It is therefore necessary to be sure of its financing before bidding.
Good to know: The balance of the auction price (in addition to the amount of the deposit) must be paid within a maximum of two months from the day on which the auction became final.
Attention, if obtaining a loan is in your plans, make sure that it is approved and disbursed within the stipulated deadlines:
- In case of inability to pay the remaining balance of the auction price within two months, the property will be put back on sale, unfortunately resulting in the loss of the amount deposited.
- If a partial payment of the price is made, the remaining amount will generate legal interest until full payment is made. In addition, non-payment of the balance within the specified period will result in the total loss of the funds deposited, and the property will be put up for sale again.
5° - Auction costs
The costs of the auction include court fees, lawyer fees, and registration fees. While the costs of drafting an auction judgment (similar to a bill of sale) are free.
- Court costs, also called “prosecution costs” or “advance costs”, correspond essentially to the bailiff, procedural and advertising costs generated by the auction. These fees are checked by the magistrate at the time of the hearing, and are announced before the auction begins.
- Lawyer and court fees are very high when it comes to judicial auctions.
- The registration fees are equivalent to those for a traditional sale (5.09%).
The total costs can reach a significant proportion of the selling price. You must remain cautious and ask the lawyer, before engaging you, to detail in writing the amount of the amounts to be paid and in particular his fees and court costs.
**Tip: ** You should think carefully before bidding, depending on the composition of lawyer fees and court costs; court auction costs can exceed 15% of the auction price or more. It is also prudent to determine your borrowing capacity with your bank.
Tips for buying real estate at an auction
1. Do some preliminary research: find out about the real estate that will be auctioned, review descriptions and valuations. If possible, visit the properties to familiarize yourself with their condition.
2. Set your budget: determine the maximum amount you are willing to spend, including purchase costs and any work that may need to be done.
3. Get loan pre-approval: If you need financing, make sure you have a loan pre-approval before the auction. This will allow you to know how much you can borrow and participate in the auction with confidence.
4. Take part in simulated auctions: If you are new to the subject, attend simulated auctions to get familiar with the process and rules.
5. Be ready on auction day: arrive early to register and get your bidder number. Make sure you have a valid ID and the funds needed for the security deposit.
6. Keep your cool: During auctions, stay calm and don't get carried away by the excitement. Set a maximum price and don't exceed that amount.
7. Pay attention to additional costs: in addition to the auction amount, there may be additional costs such as agency commissions or administrative fees. Find out in advance to avoid surprises.
8. Consult a real estate professional: if you have doubts or questions, do not hesitate to consult a real estate agent or a lawyer specialized in auctions.
9. Do a thorough inspection: if possible, have the property inspected before participating in the auction. This will avoid unpleasant surprises after the purchase.
10. Be ready to act quickly: if you win the auction, you'll need to be ready to sign the paperwork and make the payment on time.
II — Amicable real estate auction
We will explain to you the procedure for an amicable auction before the notary. These auctions are voluntary sales by people who, for various reasons, prefer this method of sale, perhaps for reasons of speed or fiscal transparency.
The procedure for these sales generally takes place on the premises of the departmental chambers of notaries or at the office of the notary in charge of the sale.
These amicable auctions are accessible to everyone, according to a very simple procedure. Anyone can bid directly without a lawyer. However, you can appoint a mandatary who will do it for you (notary, lawyer, family, friend, etc.).
The property will simply be sold to the person who will offer the best price, the owner does not intervene in the procedure to choose the purchaser. Your financing is not involved in this choice as is sometimes the case in a traditional sale.
1°- Preparing for the sale
Before you start a real estate auction, careful preparation is essential to optimize your chances of success. The process of these auctions is similar to that of judicial auctions, and it is crucial to understand each step.
Initially, an advance announcement must be broadcast in a local newspaper, in particular in a newspaper of legal announcements from the sales department. This announcement, published one month before the sale, will specify the date and location of the auction. It will also be posted at the notary involved or at the local chamber of notaries.
In order to effectively inform potential buyers, the notary provides detailed information on the property and organizes visits for those interested. An essential element is the specifications, or sales book, available at the notary. This comprehensive document contains crucial information such as property description, ownership history, ownership history, easements, diagnostic reports, as well as any relevant documents related to property sharing and condominium regulations. Careful review of this booklet is essential for informed decisions.
The notary, in collaboration with the seller, evaluates the property and sets the starting price, clearly indicated in the sales book. Prospective buyers need to assimilate this information well to assess the correspondence with their budget and preferences.
Before participating in real estate auctions, it is important to consider a few key factors to ensure a smooth and successful experience. Here are some valuable tips to keep in mind:
Look for the total cost: Gathering information about the total expenses associated with the auction is crucial. This includes not only the auction price, but also any additional costs, such as registration fees or commission fees. By understanding the complete financial situation, you can make an informed decision about your investment.
Estimate the overall cost: Before participating in the auction, it is advisable to have a clear estimate of the total cost of the real estate transaction. This estimate should take into account your maximum budget for the auction, as well as any potential costs for property inspections, legal fees, or renovations. This will help you avoid any unexpected financial burdens and ensure that you are well prepared for the entire process.
Consult your bank: Although not mandatory, it is strongly recommended that you consult your bank
before participating in an auction. By doing so, you can ensure that you have the financing you need and that you know what loan options are available to you. In addition, your bank can provide you with valuable information and advice on the financial aspects of the auction, helping you make informed decisions and avoid financial setbacks.
By following these tips, you can approach real estate auctions with confidence and ensure that you are well prepared for the financial aspects of the transaction. Remember that thorough research, accurate cost estimates, and consultation with your bank are key steps to a successful auction experience.
2°- Consignment
When participating as a potential buyer in an auction, it is imperative to master the concept of consignment control and its importance. Just as in the context of a judicial sale, individuals wishing to bid must provide certain documents to the notary overseeing the auction process. This includes signing a bid authorization form in two copies, one of which is given to the bidder, along with a numbered badge.
In addition to this authorization form, it is crucial to deposit a deposit check payable to the notary. The precise amount of this check is determined by the conditions stipulated in the tender, generally corresponding to 20% of the initial starting price. This check deposit acts as a security deposit, ensuring the commitment of the bidder.
It should be noted that the preceding excerpt does not delve into the precise moment of submitting the consignment check. However, it is essential to understand that this procedure is a crucial requirement for buyers, thus demonstrating their willingness to participate in the auction. In some circumstances, especially if the final offer significantly exceeds the original price, an additional consignment check may be required. Therefore, it is recommended to inquire about the precise moment of delivery of the consignment check when registering for the auction.
3° - Conduct of real estate auctions
The auctions take place at the Chamber of Notaries or at the office of the notary in charge of the sale. The presiding officer announces the price and the bidding is done by raising his hand. The president raises the price until no one bids anymore.
The traditional method of selling by candlelight, created in the 15th century to determine the close of auctions, is still used by some notaries. A candle is lit at the start of the session to mark the start of the auction. Each candle that goes out (between 30 and 40 seconds) is replaced by a new one. It is after the extinction of two successive fires without a new auction having taken place, that the last bidder is declared the successful bidder.
But this method is very often replaced by a modern sound and visual system. As long as people continue to bid on time, real estate auctions continue and are not restricted in order to reach the highest price.
Whoever wins the auction (the successful bidder) signs the auction report with the notary. This notarial act constitutes the title of ownership. In the absence of an auction, another auction may be considered, but now it is the seller who makes this decision.
4° - Payment of the price
Like the judicial auction, there is no suspensive condition for obtaining a loan, nor a 10-day cooling-off period after the auction. Think carefully, if you won the auction, you are obligated to buy.
A possibility of bidding higher within ten days of the auction (10% of the auction price) may be provided for in the specifications.
Important:
- In accordance with legal provisions, it is important to note that in the absence of competing offers within 10 days, full payment of the price must be made within 45 days from the finalization of the auction and its final nature. This time frame ensures that all parties involved have enough time to finalize the necessary financial arrangements. Respecting this deadline is essential to ensure a smooth and rapid conclusion of the auction transaction.
- In the event of a 10° bidding, the person cannot retract (no time for reflection) he is obliged to buy the property at the original price plus 10% (under the condition that no one bids on him). The price must be paid within 45 days. Of course, the auction costs are also at his expense.
Like a traditional real estate sale, this auction report, as well as the specifications, must be published by the notary at the land advertising service, formerly called the mortgage office, after payment of the price. These two acts will constitute your title of ownership.
5° - Auction costs
Similar to a judicial auction, there are specific conditions that apply to real estate auctions that potential bidders should be aware of. According to your article, those interested in bidding must provide the notary with a signed authorization to bid, as well as a numbered badge for identification purposes. In addition, a deposit check, the amount of which is determined in the general conditions, must be given to the notary.
Generally, this amount is set at 20% of the initial starting price. It is important to note that, just like in a judicial auction, there is no suspensive condition regarding loan approval or a 10-day cooling-off period after the auction. Careful consideration is therefore required. Once you have won the auction, you are legally obligated to proceed with the purchase.
In some cases, the terms and conditions may allow for a potential escalation within ten days of the auction. The overbid amount is generally set at 10% of the original auction price as specified in the terms and conditions. If no bidding is made within ten days, the final price must be paid within 45 days from the date of the final auction. It is essential to understand that in the event of an outbid, the successful bidder is required to buy the property at the original price, plus an additional 10% (provided no further bidding occurs).
Payment for the property, including auction fees, is also the responsibility of the successful bidder. To ensure that the transaction goes smoothly and to avoid any unexpected surprises, it is advisable to carefully read the terms and conditions described in the auction documentation. Taking the time to become familiar with these specifics will help protect you from any unexpected circumstances that may arise.
There you go, you are now ready to start auctioning.
In a future article, we will provide you with details on the immo-interactive sale developed by notaries. This innovative method is halfway between auction and traditional negotiation.
To answer the question “What are the possibilities offered by internet auctions?” , there are various options to consider. One of these is the real estate interactive sale developed by notaries, an innovative method that is located between traditional auction and classical negotiation.
This approach offers buyers and sellers unique benefits. First of all, internet auctions are becoming more and more democratic, thus facilitating the buying and selling process. Indeed, they offer ease of access, allowing participants to easily access the detailed specifications of the goods offered for sale. In addition, they offer the same terms and conditions of purchase as traditional auctions, thus ensuring a fair experience for all participants.
In addition, internet auctions offer buyers a withdrawal period of 10 days after signing the promise to sell. This gives them the opportunity to reassess their decision and withdraw from the purchase if necessary. This flexibility is an important advantage for buyers who want to take the time to make an informed decision.
As for sellers, internet auctions allow them to choose the buyer with whom they want to conclude the transaction. They also have the option of removing their property from the sale before the auction is over, which gives them a certain degree of control and flexibility.
In summary, internet auctions offer buyers and sellers interesting opportunities. The innovative approach to real estate sales
active developed by notaries, which is located between auctions and traditional negotiation, is an option to consider. It is possible that this method will gain popularity and become widespread in the future, offering new opportunities for real estate market players.
What other resources are available to learn more about real estate auctions?
There are several resources available to learn more about real estate auctions. If you have never attended an auction before, it is often recommended that you attend other auctions in order to become familiar with the unusual format of these events. This will allow you to understand how the auctions are conducted, the rules and the process of the sale.
Another useful resource is to turn to online auctions, which are becoming increasingly popular. This will make it possible to understand the different strategies and techniques used by bidders. These platforms give you the opportunity to access real estate auctions from the comfort of your home. They also offer the possibility of consulting the specifications related to each property put up for auction, thus providing you with detailed information on the characteristics of the property, any restrictions and conditions of sale.
In the context of online auctions, the terms of purchase are similar to those of traditional sales. For example, a withdrawal period of 10 days is generally granted after the signing of the promise to sell. This gives you additional time to think about your decision and, if necessary, cancel the transaction.
What are the advantages of participating in other auctions before starting?
Attending other auctions before you start brings you several advantages. First, if you've never been to an auction before, it may be prudent to become familiar with this distinctive format by watching others. In addition, the increasingly popular trend of online auctions allows for even greater convenience. These platforms offer access to the auction catalog and offer identical conditions, including a withdrawal period of 10 days after signing the sales agreement. Sellers may also have the option of choosing the buyer they prefer and can remove the property from the auction before the auction ends. By attending other auctions, you can gain invaluable knowledge and experience, which will ultimately boost your confidence and understanding of the auction process.
What are the steps to follow to participate in state-owned real estate auctions?
1. Look for listings for state-owned real estate auctions. You can find them on specialized websites, in local newspapers or by contacting real estate agencies. State-owned real estate auctions are sales organized by the public administration to sell state-owned real estate. These assets can be buildings, land, or other types of properties. The auctions are open to the public and participants can bid on the goods that are put up for sale. These sales are often used to sell seized or confiscated assets, or to collect unpaid debts.
2. Take note of the properties offered for sale. See descriptions, photos, and additional information to get an idea of the properties that are available.
3. Check the terms of sale. It is important to understand the specific rules and requirements for participating in the auction, such as security deposits, payment terms, and additional fees.
4. Make sure you have the necessary funds. Before participating in an auction, you must have the financial means to pay the security deposit and the total amount of the auction if you are the winner.
5. Register for the auction. Follow the instructions provided by the organizer to register as a bidder. This may involve completing an online form, providing identification documents, and paying registration fees.
6. Attend the auction. Show up at the designated location at the specified time to participate in the auction. Be ready to bid on the goods you are interested in.
7. Bid on goods. When the property you are interested in is put up for auction, make an offer by raising your hand or indicating your intention to bid. Keep bidding until the price reaches your limit.
8. Win the auction if you are the highest bidder. If your bid is the highest, you will be declared the winner of the auction. You will then have to pay the total amount of the auction and complete the necessary administrative formalities to finalize the purchase.
Remember to consider the risks and responsibilities associated with buying property at auction. It is recommended that you do thorough research and seek advice from a real estate professional before participating in a state-owned real estate auction.
How to participate in real estate auctions on the internet?
To participate in real estate auctions on the internet, follow these simple steps:
1. Look for websites that specialize in online real estate auctions. Some popular sites include eBay, Auction.com, and PropertyRoom.com.
2. Register on the site by creating an account. You will need to provide personal information such as your name, address, and email address.
3. Explore the various properties that are available at the auction. You can filter results based on your search criteria such as location, price, and features.
4. When you find a property that interests you, read the description carefully and review the photos to get a clear idea of the condition and characteristics of the property.
5. If you want to bid on the property, make sure you understand the rules and conditions of the auction. Some auctions may require a security deposit or a listing fee.
6. Place your bid by entering the amount you are willing to pay for the property. Be sure to meet the auction closing deadlines.
7. Track bids in real time to see if someone is outbidding your offer. If you outbid, you can decide to place a new bid or withdraw your offer.
8. If you have the best offer at the end of the auction, you will be contacted by the seller or the auction website to finalize the transaction.
It is important to exercise caution when participating in online auctions. Make sure you understand the terms and conditions, and feel free to ask questions to the seller or the auction organizer if you are unsure.
What are the different types of real estate auctions?
There are various types of real estate auctions, each with its own specificities. Here are the three main supply channels for real estate auctions:
Notarial real estate auctions
Notarial sales take place in the departmental chambers of notaries. To participate in these sales, you must give the notary in charge of the sale a cashier's check, called a consignment check, at the beginning of the session. The amount of this check generally corresponds to 10 to 20% of the price of the property.
State-owned real estate auctions
The state regularly organizes auctions of fairly particular real estate, such as barracks, train stations or land. Property put up for sale by the State often comes from “vacant successions”, that is, property belonging to persons who died without heirs. These sales take place mainly in department prefectures or tax houses. To participate, it is not necessary to register in advance. All you have to do is show up on the day of the sale with the required documents. However, a bet greater than €7,500 requires the deposit of a deposit check equivalent to 5% of the bet.
Judicial real estate auctions
Judicial sales are organized following judicial seizures, judicial liquidation procedures or divorces. They generally take place in the courts. It is important to note that in order to participate in these sales, it is mandatory to use a lawyer. The lawyer is the only person authorized to bid on your behalf. You will therefore have to give him a signed mandate, indicating the maximum amount of your bid, as well as a deposit check equivalent to 20% of the starting price.
These different real estate auction channels offer opportunities to acquire real estate at often attractive prices, but it is essential to understand the specificities of each type of sale in order to be able to participate appropriately.
