How To Buy Auction Properties?

Introduction

What if we say you can buy a property at less than the market rate by putting in very little effort? Yes, it is entirely possible when you buy properties through auctions. Banks and NBFCs conduct property auctions to benefit both the people and themselves. Buying property through auction is considered one of the best investment options by financial experts. These auctioned properties offer some unique perks like attractive pricing and a streamlined buying process. Property auctions can also be viewed as an opportunity to secure properties that may not be available elsewhere.

What is a Property Auction?

The word ‘Auction’ always kindles excitement and curiosity in the hearts of people. It is the process of buying goods by bidding for them. There will be a fixed base price from which the bidding will start. The potential buyers will bid their favorable quote and the highest bidder will take the commodity.

When the auction is for a residential or commercial property, it is referred to as Property Auctioning. Generally, this type of auctioning is conducted for properties that are mortgaged for a loan. Lenders auction properties of those who default their EMI payments for a long time after prior intimations in the form of demand notice, possession notice, or sale notice.

From the buyer’s point of view, acquiring properties at auctions can be pocket-friendly. Here are some guidelines you need to know before diving into the realm of buying auction properties.

Find a Property

Once you decide that you’re going to explore your property ambitions via auctions, go to eauctionsindia.com or foreclosureindia.com and find properties that suit you. You can also customize your search by using the filter search option. Here, you can hunt for properties based on filters like category, state, city, etc. Using the filters, you can see suitable properties that match your interests. Once you choose the property, you can walk into the financial institution’s branch office and gather details of the property and auction date.

Inspect the Property

Pictures don’t often depict the actual story. Always inspect the property, before deciding to buy it. Pay a visit and check the place for yourself. If it is a housing property, do contact the homeowner and check the insides of the building for any damages and cracks. Also, inspecting the property will give you a fair idea of how much you can pay for it. If you think the property needs a revamp or slight modifications, set your price range a little low since you have to shell out money on the property later.

Take Legal Help

After choosing the property, the first and foremost thing you want to do is to verify the property titles. The property documents can be quite hectic to verify which is why hiring professional help should be given utmost priority. Make sure there are no pending electricity bills, taxes, dues, etc., clinging onto the property. It also needs to be checked for liabilities and if possible, get a clearance certificate.

Arrange Finances Beforehand

Before participating in the auction, you are expected to pay a sum of money in advance called Earnest Money Deposit (EMD). Typically, EMD is a percentage of the reserve price or base price. Usually, this percentage is set at 10 % of the reserve price. After the auction is over and if you’ve won it, you need to pay a 25% percentage of the bid amount within 24 hours of the auction. The remaining amount should be paid within the next 15 days.

Get Sale Certificate

Once you pay off the entire bid money, you should get the sale certificate from the Financier. The sale certificate serves as the proof of payment between the buyer and seller.

Register the Property

Soon after getting the sale certificate, registering the property in your name at the registrar’s office will make it legally yours. The cost of registration of the sale certificate is lesser than the normal purchase transactions depending on the Local stamp act of the respective states. Once the sale certificate is registered, the property will be totally yours.

What are the risks involved in buying auction properties?

Buying auction properties has its risks. However, you can fend them off by following strict verification of titles and taxes. Few risks that you need to take into account are property dispute, property condition, overbidding, multiple ownership, outstanding loans from multiple lenders, etc.

Why should you invest in auction properties?

Auction properties are often referred to as the investor’s paradise. If you are looking to invest in a property, auctions are the right place for you to be. Because, there is a massive possibility of you ending up buying a fully constructed house for your family, machinery for your business expansion, or your dream apartment with 20% to 30% less than that of the market value. From an investor’s eye, after acquiring the property, you can sell it for a hefty profit sometime later.

So, should you go ahead and buy auction properties?

Yes, absolutely. Even though, there are risks involved, they are negligible and if the above necessary guidelines are being followed you will have no trouble whatsoever. Verifying the property documents and the property itself with a keen eye will be half the job done and the rest will automatically fall into place. We provide vehicle loans, home loans, loans against properties, personal loans, and business loans to a wide range of people across the country. Since our inception in 1978, we have helped 36 lakh+ people across India to enter a better life. Their happiness is a testament to our commitment towards excellence. For more details about us, please feel free to walk into one of our 1,380+ branches situated in every nook and corner of the country or call us at our toll-free number 1800-102-4565. Do visit our digital medium to learn more about us.