Bank auction is a bit of a boring process. Currently, bank auctions are stolen by some agents. Agents charge a hefty fee in this whole process. I never suggest going through agents, as the chance of cheating is high through agents. Clients prefer to buy bank auction property through an agent, especially in Mumbai, and are ready to pay x% in cash during the bank auction process. The desire to buy a property at a discount disregards the associated risk. As I always suggest, it is illegal to pay through cash in any property deal. I encourage all of my readers to participate directly in the bank auction without intermediaries. In fact, recently, banks started e-auctions, which are more transparent and convenient.
Why is property auctioned?
I know that you all know the answer to this question, Property is auctioned because the borrower failed to make payment. Normally, the bank auction process is started when the borrower defaults on three consecutive home loan EMIs. A notice is served to the customer to reply within 60 days that the bank should not initiate an auction of property due to default in payment. Borrower can pay the payments, and this notice is withdrawn. Otherwise, Borrower can make his objection within 60 days with justification for non-payment of EMI. In case no reply is received from the borrower or the bank and the bank is not happy with the reply, the bank can start the bank’s auction process. Once this notice expires after 60 days, the bank may auction the property after 30 days.
Steps to Buy Property through Bank Auction
Step 1: Search for Bank Auction Property
This is one of the most painful steps, as there is no organized information in India but with AuctionGenie ,we have made it quite easy and efficient to find bank properties that are up for auction with relevant information and documents and are updated regularly . The other sources of information are newspapers, notices posted in bank branches, or notices posted in society. You can also check the sale notice on an asset reconstruction company’s website, such as ARCIL. It is recommended to narrow down your search so that it will be easy to search the property
Step 2: Check Property Details
Once you shortlist bank auction property, carry out basic checks on our own. Check the market for the market price of the property; clearly, the reason for the bank auction is payment default, but check out any legal dispute, bank auction-related details, and how you can join the bank auction.
The biggest problem with bank auctions is that you won’t have access to property papers before buying a title. Banks are not ready to share much information. The bank’s primary goal is to dispose of the property. If you are truly interested in buying the property, then it is advisable to hire an expert for this process. One important point to check is the balance due to the defaulter. In many cases, the amount outstanding is much higher compared to the reserve price. reserve price. Please check if the property is auctioned at an amount below the outstanding balance and then how the bank will collect the balance amount. In such cases, the defaulter must pay the balance, but you should clarify. If the final bid amount is more than the due amount, then the balance amount is paid to the defaulter by the bank.
Step 3: Physically inspect the property
It is advisable to personally inspect the property. Now a days banks have started stating the inspection date and time in auction notice. To inspect the property, you can visit the spot at a designated time. In the e-auction notice, you will find the contact information for the concerned officer. It is advisable to call him and get all the details. Now one good thing is that if the bank is planning a physical inspection, then it means the bank has physical possession of the property. It is always recommended to buy property where the bank has physical possession. In cases of notional or symbolic possession, the bank auction winner will fight to get possession. After the auction, the bank will be totally non-cooperative. In some cases, it may take years to get physical possession, or you may need to file a court case to get physical possession.
Step 4: Submit the Tender Form.
In this step, you can collect the tender form, and you should pay EMD (earnest money) along with the tender. EMD is usually deposited through a banker’s check or demand draft. Please check all details in the tender form and send your tender before the tender closing date. Along with the tender form, banks also expect KYC documents. The time is very short; therefore, you should plan all documents well in advance. One of the most common reasons for rejection of a tender form is an incomplete tender form, i.e., either KYC papers are not available or the tender form is not filled out properly.
Step 5: Bidding
There are various ways of submitting your bid. You can submit your bid via the bidding form. In most of the cases, tender form and bid form are one and the same thing. In short, you can submit a bid via a tender form. You have to submit a different tender form or bid form if you wish to submit multiple bids in “multiple of increase in bid amount.” In some cases, the tender form is submitted physically, and the bid is made online through a separate bid form. Competitive bidding is allowed by the bank in certain cases among the bidders to increase the final price amount. You can bid multiple times during the e-auction window. With the exception of e-auction, there is no standard bidding method. It’s the only option for the bank.
Step 6: Auction Date
On the auction date, visit the site, bank, or auction venue to check whether you won the bank sale or not. If bids are made through a tender form or bid form, then the bank will open all the eligible bids in front of all bidders. The highest bidder is named the winner of the bank auction. If you win the auction, you must submit 25% of the bid amount within 24 hours, including the EMD deposited with the tender form. Balance 75% of bid amount should be deposited within 15 to 30 days from the date of bank bidding. If you’re looking to get a home loan, it’s advisable to apply to the bank that has auctioned the property. Normally a home loan is a risky amount, and most bank auctions are closed without a home loan. Banks are not ready to lend on foreclosed properties. I will not recommend taking out a home loan for such properties due to the tight timelines.
Step 7: Sale Certificate
After the balance of 75% payment is made. You will receive the sale certificate from the bank, but the title transfer is incomplete until you register it in the sub-registrar office.
Step 8: In the Sub-Registrar Office, register the sale certificate.
You can register a sale certificate and insist on adding the defaulter as a confirming party. The sale certificate should be signed by the authorized bank official at the time of property registration.
Important Points linked to the Bank Auction Process
- A bank auction is planned after 30 days from the date of the auction notice. If the defaulter pays the money to the bank in between, then the bank auction process is cancelled.
- If you win the bank auction and do not pay the balance amount within the specified time, then your entire paid amount will be forfeited by the bank.
- Properties auctioned by PSU banks are less expensive than those auctioned by private banks.
- Last but not least, please avoid aggressive bids during the selling process. To address this point, you should have a decent idea of the current market price of similar properties.
