Buy a Property at 20-30% less than market price in Auction.

By Abhay Harish Shah , Realty Quarter

Prices of the current property are making the real estate market null and silent. Real estate developers are encouraging buyers by giving some price discount which ranges from 5-6%. However, people are smart enough now and they know how to save their money in more and more ways. Many people search for the properties which are repossessed by banks and are frequently sold through auctions. The best part of this auction property is that a buyer can get prices that are 20-30% less than the current market price.

If a borrower fails to pay the interest amount multiple times or the loan amount provided by the bank, then a bank has all rights to seize the property. These properties are then auctioned. According to the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act, 2002, banks can auction the property to recover their losses. As the banks are trying to recover their losses, they prepare to sell the property at a lower price than usual rates. Generally, auction property is not published in a popular newspaper, instead, they publish in B Rung Newspapers.

If a buyer wants to buy an auction property through a loan then, let me tell you that you need to arrange 100% of the funds and show for 1 month at first and then you can demand a loan against that property. Also, the interest rate in this auction property is a little bit more than the Normal Home Loan Rates & there is no income tax benefit available to salaried class in this case.

3 Major points you need to check before buying an auction property:

1) If a loan is taken from other lenders: The bank that auctions property will cover all the dues; however, there is no assurance that similar property isn’t sold with different lenders. This issue is more intense ashore allocates developed private apartments or on commercial properties.

2) Other outstanding dues:

A buyer has to bear other outstanding charges even though a bank recovers its dues from the buyer. There may be some other outstanding charges like society dues, electricity bills, property tax, etc. There is a high probability that the borrower might have defaulted on other expenses before that.

3) Tenants in the house:

The chance of earlier owners staying in the house is less because banks usually ask them to vacate before auctioning the property. However, if it is already let out, the tenants may be still staying in the house and it becomes your responsibility to evict them. Freeing a house of its tenant is difficult in India, especially if the tenant has been staying there for a long period. The best strategy is to avoid a house which is already occupied.

By making some precautions before buying an auction property, one can save their money as well the legal stress which might occur due to the lenient paperwork.