Bank auction properties in India are getting momentum as lots of people are participating in these auctions. It is lucrative investments as they come at attractive prices. Often when a property loan borrower fails to pay back the borrowed money to banks, their properties become distressed properties and banks take them over to recover their dues. And after demonetization and covid-19 we can see tsunamis of these types of properties.
As these properties are mostly sold below the market prices and looking at good locations so these factors are making bank auction properties popular among investors and property buyers.
Here are some key things that you should keep in mind if you are looking to purchase a property at a bank auction.
Here are a few tips for buying Bank Auction Property
- Once you have shortlisted the property, carry out all preliminary checks on the asset. Post that, get key details from the bank on the title, outstanding balance of the defaulter, etc.
- Carry out due diligence of the property, w.r.t legal titles. If banks are providing property papers then it is advisable to check it with lawyers.
- In some cases, there could be other liabilities associated with the property which is being auctioned unknown to the bank. Try to get details of that.
- Talk about the property prices in that vicinity and other details from local area property agents.
- It is always advisable to physically inspect the property as it helps in cross-verifying whether the bank has physical possession of the property.
- Not all auctioned properties give you the option to apply for a loan against them so talk about it in advance and take action accordingly. If you plan to get a loan sanctioned, ask the auctioneering bank before the auction for in-principal loan approval.
- Before applying in any auction, one should first quantify his property requirement in terms of location, unit size, price range, and amenities. On the basis of these parameters, the individual should then shortlist the property and apply for a property auction.
- On the basis of the requirement regularly check the leading newspapers and a few online websites which publish the bank auction properties.
- The prospective buyer has to first submit the tender form with an EMD and later, the bid form. Submit the form with proper details with KYC documents.
- If the bid for a property is successful in an auction, the buyer has to pay the required amount at relatively short notice, so before entering an auction you should arrange the fund or he/she runs the risk of losing his/her Earnest Money Deposit (EMD) in case of a default.
- Finally, when you register the sale certificate try to have the borrower as the first guarantor.