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Bank Auction properties in India - seven steps for buying properties in Auctions - foreclosureindia

07th November 2012
By foreclosure india in Real Estate Law
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The real estate investments are broadly three types.

1. Self-occupied – To live peacefully and to pass on the property to future generations along with sweet memories.
2. Long term Investment – Buying the properties as a long term investment and getting rental income as pension and to keep the property for future generations.
3. Short term investment – Buy the property and after attending some minor repairs / modifications etc sell it for profit.

Buying properties in Bank Auctions is an intelligent financial decision. The following are the seven steps required to buy properties in Bank Auctions / Foreclosures.
1. Read The Bank Auction Notice / Sale Notice Carefully: Advised to take a print out of Bank Auction notice from internet portal and read the details mentioned in the advertisement carefully and note down the important aspects like contact details, inspection date, reserve price, earnest money deposit ( EMD), cost of auction forms, tender submission time & date, and finally auction date & time. All these are very important aspects for participating in the Auction and to Buy properties successfully.

2. Documents verification: Enquire with the bank / financial institution about further information of the property. Visit the Bank and see all the documents such as registration documents of the present borrower, link documents, latest encumbrance certificate pertains to the property, approved layout for plot by the competent authority, approved plan for flats / houses by competent authority etc. If the Encumbrance certificate available with Bank is old one, please take a latest Encumbrance certificate from the Sub registrar concerned or from online portals, so as to confirm that the property is safe to buy. Make sure that there are no encumbrances for that particular property other than the Bank / financial Institution auctioning the property. If necessary request the Bank to give copy of the documents for showing them to the legal adviser and get the legal opinion. Get clarifications from the Bank, if any other information is required about the property. If required, consult with a solicitor / advocate before the auction. Once this aspect is clear, you can proceed further.

3. Inspection of the property: Visit the site of the property as per inspection schedule given in Sale notice. Consult people around the property to know the price prevailing in that area. While inspecting the property observe the present physical condition of the property, enquire about the pending property taxes, electricity dues, welfare associations maintenance dues. The property comes as is, as such any pending dues should be added to your consideration price before quoting.
4. Get your finances right:- Please make sure that you are prepared for the price to be paid for the property. If you have ready cash, you can clinch the deal faster and possess the property fast. If you are thinking of availing Bank Loan, you should first approach the bank and get sanction of pre approval loan. SBI (Home Loan PAL - Pre-Approved Limit), HDFC, Axis Bank and Kotak Mahindra Banks are sanctioning the pre-approved loans. This pre-approved loan is to complete the Bank auction in the specified time frame very smoothly.
5. Submission of tender: Some of the Banks / financial Institutions are selling the Bid forms / tender forms. In some cases date of submission of bids is 2 to 3days earlier than the auction date. It is important to take into account, pending dues when deciding how much to bid. Submit the bid at the specified branch before the due date and time, along with demand draft / Banker cheque as EMD ( earnest money deposit), copies of purchasers PAN card, photo identity card and residence proof. In most of the cases the EMD amount is 10 % of the reserve price.
6. Participating in Auction: Based on the data & statistics of the foreclosure properties / bank auction properties in India, around 40 % of the Bank auction properties are unsold, due to various reason. Around 40 % properties are getting one bid only. Around 20 % properties are getting two or more bids. There is an exception to the Bank auction properties in Mumbai, where more number of bids are coming for almost all properties as per the observation of Arrive early to the venue of the Auction, meet the Authorised officer and get familiarized about the auction process and participate in the Auction. You will be successful if you are the highest bidder. You need to pay another 15% on the same day of the auction. Please feel free to call for any clarifications in participating in Bank auctions.
7. Sale certificate & registration: After payment of total amount either on your own sources or through Bank loan, a sale confirmation certificate will be issued. You have to pay the stamp duty and get the property registered on purchaser name. The Authorized officer will register the property on be half of the Bank. After completion of registration, take the physical possession of the property immediately.
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