Prices go down, not up, in new-style property auction

A new form of online property auction is being used to sell properties quickly – with prices dropping from the starting price rather than rising.

The novel auction – called a vente au cadran or vente à prix dégressif – is being used for the sale of a €1.8million Riviera villa in October.

Based on the fact most properties today sell for less than the asking price, Nantes notaire Vincent Chauveau said it short-cuts the normal drawn-out sales process that can take months.

“Here, for example, with this villa at Saint-Raphaël in Var the sale will start at €1.8m and the price will fall by €11,000 each 30 seconds for 20 minutes to reach the reserve price, which is set by the seller.

“It will, potentially, sell in 20 minutes although we will have done a lot of preparation work in the months up to the sale.

“Potential buyers contact me beforehand for documents, checks and to visit the property, then in the sale they offer the price they are willing to pay, which is their ‘market price’.”

The first bid does not halt bidding as a sale is not complete until a compromis de vente is signed. Others still bid at their ‘best’ price. The seller chooses a buyer – usually the highest bidder but it may be someone with better finance – and, if they fail to complete, the next person is offered it at their lower price.

Mr Chauveau said he aimed to find interested buyers first by advertising widely with paid adverts targeting a particular audience on Facebook: the Saint-Raphaël villa on sale on October 11 was seen in New York, Paris, London, Quebec and Brussels.

“We have hits and misses. We have done four sales: two sold in 20 minutes and in two buyers did not go through with it. One Paris flat started at €330,000 and fell to €290,000 but, despite having five people ready to bid, no one did so.”

He said auctions scared sellers who feared starting too low, but with this system they started high to come down to the reserve – a Paris studio sold for €145,000 when the reserve was €105,000.

Once the sale is done there are further fees on top with the usual frais d’acte and taxes through the notaire plus a negotiation fee for Mr Chauveau’s office, Picart Chauveau Notaires. He said he had had interest from all over France for the system, which was why he as a notaire in Pays-de-la-Loire was selling a home on the Riviera.

The online auction runs using software from Nantes start-up Kadran who created it as way to sell new-build homes quickly.