BUYING repossessed property through auctions can net you the home of your dreams at a bargain basement price.
Robin Baker and his wife Christine did so when they bought a repossessed property in Brittany: "We found out about the auction by searching for ‘enchères’ on the internet, and by chance found a property in the area we were proposing to buy.
"However, we were unable to bid ourselves, and had to deposit 20% of our maximum offer with the avocat who bid in court on our behalf.
"We also had to supply a mountain of information about ourselves.
"The property sold for a nearly €20,000 less than we had been prepared to pay, so we were delighted, despite there being several thousand euros of fees and other costs on top of the purchase price.
"The local agent, whom we have since met, believes the property sold for around 30% less than it might normally have fetched if it had been placed on the reasonable market, and said it had also been tidied up a bit prior to sale."
However, Stephan Pfleghar of Compass Immobilier in Gascony warns bargains are not always the rule. "If there are two people in the room who want it, then that is all it takes for the price to shoot up. Most properties are sold for a figure well in excess of their reserve price."
"That said, the reserve price is rarely an indication of the true market value, so do not be misled. Get advice from a local agent on what they think it is worth."
On that point, Jerry Green, of Clé Rouge Immobilier in Lot et Garonne, said: "Too many people wrongly assume estate agents in France are out to fleece buyers, when in most cases all they really want to do is sell the property and collect their commission."
This is particularly true in a slow market, where agents seek, above all, cash flow, just to keep the business afloat.
In any case, buying a property at a bargain price will require a degree of patience, but it also helps if you know how to find such a property.
In the current economic climate, savvy buyers are searching the market for such ‘distress sales’, with the possibility of finding a real bargain.
"It is not very easy to access suitable information about what properties may be subject to mortgage enforcement proceedings," says Vincent Morand, of French property solicitors Ashton Graham.
Many such sales never reach the courts, as sellers try to avoid the ramifications and ignominy of legal proceedings and just instruct an agent to sell the property for whatever can be obtained.
In other cases, where the case does reach the courts, it is possible for the owner and lender to agree with the court for the property to be placed in the open market on an amicable basis, on terms decided by the court. "In these circumstances, an auction of the property may not take place" Mr Morand said.
"The judge may determine a price below which the property cannot be sold (having regard, in particular, to the level of the outstanding mortgage) and several months are then granted for a sale to be achieved through one or more agents."
"The agent may do no more than place the property on the market at the minimum price determined by the court, fees included."
If it cannot be sold at this price within the agreed period, then the matter would need to come back to court, and either a new lower price agreed, or an auction ordered under the terms of the court.
A judicial auction would also take place where the matter could not be settled on amicable terms in the court, when the property will then be sold for whatever can be achieved at the auction, subject to any minimum price sought by the lender.
In the event it cannot be sold at this minimum price, then the property simply passes to the lender.
"Most lenders, therefore, prefer that the seller is granted some time to sell the property on an amicable basis," says Kathleen Mackinnon-Helm, of mortgage brokers Cafpi International. "This way they are normally assured the price will cover the outstanding debt. There is no guarantee of that in judicial auction."
However, the process of buying through a judicial auction is complex, and you must engage an avocat to bid on your behalf.
Sadly of course, for every one that finds a bargain, there is also often a victim, in some cases expats themselves who have found themselves in financial difficulties and forced into a distress sale.
Thus, the unhappy story of the English couple who purchased a property in Etagnac in the Charente in 2006, funded in large part through a mortgage.
With the fall in the value of sterling and other financial difficulties, the couple were unable to maintain the mortgage payments and simply fled the country.
The house was sold for €26,000, plus costs - well below its open market value.
For more details on buying cars and homes at auction see the practical section of our website.
