Bank auctions generally generate huge interest as such units are often priced below current market rates and can be tempting. State Bank of India (SBI) and Bank of Baroda (BoB) will conduct e-auction of properties on October 25 and 22, respectively.
“Your next big investment opportunity is here! Join us during the e-auction and place your best bid.” State Bank Of India Said in a tweet.
“Here’s your chance to buy a property of your choice! #BankofBaroda presents a Mega E-Auction on 22nd October 2021, where you can easily get the property of your choice,” BOB tweeted.
The auction will include commercial as well as residential properties. These are basically mortgaged properties of the defaulters and the bank is auctioning them to recover the dues.
Buying a house at auction is sometimes very rewarding. “The auction house will be available at a rate below the market value due to its DLC rate commitment by the government. However, the properties auctioned have some issues, as the process of auctioning the property is a lengthy process and may take up to 1 year to finalize. By then the property gets damaged and this makes it an issue of after-services. Also, sometimes there is some due on a property like maintenance charges or house tax which is paid by the owner and if a person buys that property then he is liable to pay those charges. These can be negatives of an auctioned property,” said Amit Gupta, MD, SAG Infotech.
People get deluded as the price of these properties is less than the market value.
“If you’re looking for a deal and don’t mind some extra legwork—the potential benefit is that you can get a good deal on the purchase price and there may be less competition for those properties, fewer people.” Know how to buy a property through an auction. While not all properties may be a problem, bidders should be aware that such opportunities are not as straightforward as normal property purchases. Chief Marketing Officer of MyFundBazaar India Pvt Ltd Shruti Khandare said, from legal due diligence to understanding that if they have enough bandwidth for it, then the bank auction should be looked at as a whole.
Buyers should also be aware of the risks involved in buying a property at auction.
“While people believe that banks are explicitly owned assets in an auction, on the contrary, an auction notice has a clause – there is no encumbrance on the property and the bank is liable for any undisclosed encumbrances or claims, rights or dues of third parties. Will not be responsible.. Despite SBI giving the address and size of the previous owners, the names and addresses of the previous owners on its website, if a person claims to be the owner of the property after purchase, it is highly unlikely that The bank or institution will come to your rescue,” Shruti Khandare said.
The terms and conditions for the properties that SBI is auctioning convey risks that buyers should be aware of – the bank had also said that all statutory and non-statutory dues, taxes, fees, charges etc. will be the sole responsibility of the bidder. “So if the previous owner had not paid dues on the property, the winning bidder would have to repay them. Further, these dues can neutralize the benefit of lower prices, attracting interest penalty if they are not paid on time. Apart from this, you may also need to incur additional expenditure on repair and maintenance of the property.”
So, if you are planning to buy property through bank auction, understand all the pros and cons before taking a decision.
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