The judicial auction sale of real estate is on the rise in some departments of the Île-de-France, such as Paris or Essonne, a sign of a difficult economic situation. If the starting price is very low, the goods are more often sold at market prices.
41 euros per square meter for an apartment located in Grigny, 1434 euros per square meter for a house located in Palaiseau… The Judicial Court of Évry-Courcouronnes (Essonne) organizes Wednesday, October 23. a public auction of three houses, three apartments and two parking lots located in Île-de-France, at prices that are, to say the least… attractive.
The prices are really ridiculous for these geographical areas. According to the PAP website the price per square meter in Grigny (Essonne) is set at 1,644 euros for an apartment and 5,113 euros in Palaiseau (Essonne) for a house. But this is not good for the final sale price, which will be more often at the market price.
A low price, but well that sells at the market price
The price of the property is set by the pursuing creditor, depending on the amount of the debt and the value of the property. “This price is low to attract buyers, it does not correspond to the real value of the property”, explains Emmanuel Constant, lawyer specialized in judicial sales at CB Avocats and master in Paris 1. But this does not mean that the legal auction it will necessarily be a good deal.
“In Île-de-France, it is very rare that the property does not go for the market price,” explains Emmanuel Constant, lawyer.
“It’s a way like any other to buy real estate,” he analyzed. “It is neither the goose that lays the golden eggs nor the Eldorado,” they warn. “There are no agency fees, but there are attorney’s fees,” which makes the procedure equivalent in terms of costs to a traditional purchase procedure (via a site or an agency).
Sometimes, prices can go out of the market “in case of strong real estate speculation” in the real estate sector, specifies the lawyer. On the other hand, the property can also go below the market price. This will be the case if the property is “occupied, needs work or depending on the time of year”, explains Maître Amir Ben Majed, lawyer specializing in commercial law.
The successful bidder (person who wins the auction item) must deposit 10% of the starting price in order to bid. Then it will take two months to pay the price. The sale is made in court under the authority of the executing judge. Bidders are represented by a lawyer.
How to explain such judicial sales?
For the judicial court of Evry, “the causes can be numerous”, ranging from “unpaid charges” to “dispute in case of inheritance”. The creditor will start legal proceedings by taking the owner to court and the judge will decide whether or not to order the auction of the property.
“The creditors can be co-ownership trustees for unpaid charges, banks for unreimbursed property loans, or even, in some rarer cases, the State for non-payment of property taxes” explains Master Amir Ben Majed.
The auction in a legal framework is really “the last solution”, explains lawyer Emmanuel Constant. As part of the procedure, the judge will often leave a period of time to allow the owner to sell the property amicably. But “if the economy is bad, it is more complicated to find a friendly buyer”, explains the lawyer. “These are cyclical explanations.”
An upward trend in judicial auctions
“I have noticed an increase in this type of sales since Covid,” notes Master Amir Ben Majed. The lawyer explains that “this has really increased in the middle of 2023”. Before the pandemic, he attended hearings “with four to five properties at auction”.
“Today the audience is full, with more than 12 properties for sale,” he describes.
An observation shared in Île-de-France by the Vench website (real estate auction site in France) which notes “notable increases” in the number of auctions in Paris in the first half of 2024 (+34% compared to 2023), and in Essonne (+28% compared to 2023) , reflecting “Increasing economic hardship for local property owners.” On the contrary, other departments such as Bouches-du-Rhône, Seine-Saint-Denis and Val de Marne see a “significant decrease” in the sale of the judicial auction, analyzes the site.
The increase in this type of procedure should be “a wake-up call” according to Amir Ben Majed, who sees it as a sign of economic deterioration and the difficulty of over-indebted owners to pay taxes and real estate loans.