Buying a property at auction in France means following different rules to an ordinary purchase – including making your bid before a candle goes out.
Almost all property auctions follow an ancient tradition of taking place before a large lit candle and two smaller candles, which burn for 30 seconds, then go out in a puff of smoke.
The auction starts when the large candle is lit and bids are taken. When there are no more bids, one of the small candles is lit. If no one speaks while it burns out, a second small candle is lit.
If no one speaks before that one goes out, the bid stands.
If someone makes a higher bid while the candle is lit, the auction returns to the hall.
A spokesman for the Conseil supérieur du notariat said: “It is an ancient tradition and, quite frankly, we like doing it like that. There is a sense of drama that is created.”
The candle auction system was formally introduced in 1794, but is thought to be much older and was used in Burgundy when it was a dukedom, separate from France.
Another peculiarity of property auctions is that they are always handled by notaires, not by commissaires-priseurs, who have a state concession to run all other auctions.
Properties are usually put up for auction with a discount of between 25% and 30% of the estimated value. This value is usually given to sellers by notaires who have, through their job, probably the best idea of the property market in their area.
The discount is put in place to stimulate interest.
“Most private sellers go to auction because they inherit properties with other familymembers and there are disagreements over the price or other aspects of what should be done,” said the notaire. “Holiday homes in the country also frequently go to auction.
“By going to auction, there is no doubt that the price you get is the price that people are prepared to pay.”
Another category of selleris one where the property is exceptional – such as a lighthouse in Brittany converted into B&B accommodation, sold by auction in the summer.
A further advantage for sellers is that auction sales are quick, usually being concluded two or three months after the decision to sell that way is taken. The first step for the notaire is to draw up a strict list of specifications (cahier des charges), detailing what is for sale.
This legal document is more detailed than most estate agent property information and is important because visits to the property are only by arrangement, and usually limited to one hour. Second or third visits are not encouraged.
Often a number of interested people are grouped together for the visit.
Notaires always recommend that visits take place before the auction but it is not necessary to do so – some professional property investors are happy to bid on the basis of the cahier des charges and their know-ledge of the area without a visit.
To be allowed to bid in a property auction, a cheque for 20% of the starting price of the property must be handed in to the notaire.
It will be returned if you are unsuccessful, or used as part of the payment if you are.
Auctions are usually held in the Chambres des notaires, which are usually situated in the largest town of the department, with several notaires having their sales on the same day. If there is just one property for sale, the auction sometimes takes place in the notaire’s office.
Each department has its own Chambre and they usually have a website with a section for houses that are being sold through notaires, with a filter to show those going to auction. After the auction in the hall, there is a period of 10 days during which someone can make a higher bid.
If they do, the auction is re-advertised and held in public again, with the price starting at the new bid.
When there is no bid in the 10-day period, the buyer has 45 days to pay the full amount.
It is very important for buyers to sort out their finances before the auction because, unlike with ordinary house sales, it is not possible to withdraw if banks do not give you a property loan.
People who are unable to pay have a penalty: having to pay all the auctioneer’s fees for the first auction and for the sale that follows when the property is put back on the market.
In addition, if the new auction results in the house selling for a lower amount than the first bid, they have to make up the difference.
For buyers, the attraction of the auction is that they can sometimes buy properties for lower prices than through estate agents or private sales, where sellers often have an over-optimistic idea of what their homes are worth.
They also benefit from the speed with which things go through – if they can pay up on the 11th day of the sale, they can usually get the keys soon afterwards.
Notaires also sell by auction through a number of property websites, using a system called enchères interactives, where the candle tradition does not take place.
Instead the property is advertised on the site with downloadable specifications, drawn up by the notaire. Buyers register their interest by sending in a deposit, as in an ordinary auction, and are then invited to bid over the internet on a specific day.
Most sites show the price being offered, moments after a bid is registered, and higher bids are taken, usually for four hours or so.
When the time expires, the highest bid starts the 10-day waiting procedure, as for candle auctions.
There are two other property auction methods in France.
One is relatively rare, the vente aux enchères domaniales, which is organised by the state and usually involves the sale of properties where there are no inheritors. Many of these have been left empty for years and are not in good condition.
Buyers have to pay the full amount within a month, if the price is below €15,000, or in three monthly payments if the price is higher.
There are no notaire fees or property registration charges.
The other involves cases where houses are sold off through housing loans not being paid, or as part of a court ruling called vente aux enchères judiciaires, and they are organised by the courts, not notaires.
Individuals who want to bid have to instruct a lawyer to bid for them and visits to the properties take place once and for an hour only.
Usually only professionals take part.
Lists of properties for sale are often found in the legal announcement pages of newspapers such as Le Figaro and Les Echos, often on a Thursday or Friday, and concentrated around Paris and surrounding towns.