TIPS ON HOW TO BUY AUCTION PROPERTY
Banks always seize properties from people who are unable to pay their loans. The “foreclosed properties” are later auctioned by the banks to recover the money lent. The bank becomes the legal owner under the SARFAESI Act once they have seized the property and have the right to sell.
The assets are typically sold at a lower market price because banks only need what they loaned.
The process of buying a foreclosed property is worth it because you can strike an excellent deal.
Advantages of buying foreclosed assets
The prices of auctioned properties are consistently below the market price. Therefore if you had planned to buy the item in the market, you could use the extra money for other things.
Banks will always verify the legal terms of an asset before taking it as collateral for a loan. The bank’s auctions are secured and permitted under the SARFAESI Act and DRT act.
The ownership transfer and the complete transaction will not take much time.
Unfortunately, there are always two sides to a coin. The following are the disadvantages of a foreclosed asset.
The people who owe bank loans don’t take good care of the property after they realize the bank will seize the property. For example, a car owner may stop servicing the car, which the bank will take. Therefore the quality of the foreclosed asset is not guaranteed.
Some malicious property owners may even cause damage to the property out of anger.
If you need the property, you must act fast as soon as the bank announces the auction.
Where to find foreclosed assets
There isn’t a central database for the foreclosed asset. However, there are several online websites such as Foreclosure India.com, Bank e-auctions, and others you can check for information.
Most banks advertise on local media, such as newspapers, when there is an auction.
The bank will also put the notices in their branches and banking halls.
What to do after getting an advert for a foreclosed property.
When you get information that a particular property you are interested in is up for grabs, the first step is to visit the property with the bank official in charge of the auction.
Get all the information about the property, like the initial owner from which it is of the asset. Check the area the property is from and the price of the purchase.
You should also get all the details about the auction, like time, date, and place.
What to do if you want to attend the auction
To participate in the auction, you must submit an application and KYC documents. You also give the bank a percentage of the reserve price of your bid value.
Have enough money on the auction day as the highest bidder will take the property and pay for it.
Check for the following details with the foreclosed asset.
The foreclosed property is something second-hand. The previous owner encountered financial difficulties, which might follow up in other aspects of the property.
You may find that the previous owner of the asset had unpaid taxes on the item.
They might not have been able to pay maintenance to society and pay gas and electricity bills.
Take precautions before closing a deal for a foreclosed property
Always have a lawyer who will guide you on the legal procedures of the property. The lawyer will counter-check all the legal aspects of the property.
Check the state and how old the asset is to avoid spending much money on renovations.
In the case of a house, avoid having the previous owners stay on the property after the deal is closed, as evicting them will be a struggle. If possible, make arrangements with the bank to evict the previous owner before you take the property.
