Judicial auction sales of real estate are on the rise in certain departments of 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 most often sold at market prices.
41 euros per square meter for an apartment located in Grigny, 1,434 euros per square meter for a house located in Palaiseau… The judicial court of Évry-Courcouronnes (Essonne) is organizing a public auction of three houses on Wednesday October 23, three apartments and two parking lots located in Île-de-France, at prices that are, to say the least… attractive.
The prices are indeed derisory 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 does not bode well for the final sale price, which will most often be at the market price.
A low price, but goods that sell at 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 specializing in judicial sales at CB Avocats and teacher in Paris 1. But that doesn’t mean that the legal auction 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 analyzes. “It’s neither the goose that lays the golden eggs nor the Eldorado,” he warns. “There are no agency fees, but there are lawyer fees”, which makes the procedure equivalent in terms of costs to a traditional purchasing procedure (via a site or an agency).
Sometimes, prices can go beyond the market “in the event 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, requires work or depending on the time of year”, explains Maître Amir Ben Majed, lawyer specializing in business law.
The successful bidder (person who wins the item at the auction) must deposit 10% of the starting price in order to be able to bid. Then he will have two months to pay the price. The sale takes place in court under the authority of the enforcement judge. Bidders are represented by a lawyer.
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How to explain such judicial auctions?
For the Evry judicial court, “the causes can be numerous”, ranging from “unpaid charges” to “dispute in the case of an inheritance”. The creditor will initiate legal proceedings by taking the owner to court and the judge decides whether or not to order the auction of the property.
“Creditors can be co-ownership trustees for unpaid charges, banks for unreimbursed property loans, or even, in certain rarer cases, the State for non-payment of property tax” 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 an amicable buyer,” explains the lawyer. “These are cyclical explanations.”
An upward trend in judicial auctions
“I have noticed an increase in this type of sale since Covid,” notes Master Amir Ben Majed. The lawyer explains that “this really increased in mid-2023”. Before the pandemic, he attended hearings “with four to five properties up for auction.”
“Today the audiences are full, with more than 12 properties for sale,” he describes.
An observation shared in Île-de-France by the Vench site (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 “an increase in economic difficulties for local owners”. Conversely, other departments such as Bouches-du-Rhône, Seine-Saint-Denis and Val de Marne are seeing a “significant decrease” in judicial auction sales, 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.
