Bank Auction is a bit of a tedious process. Bank Auctions the Cheaper and Smarter way to buy your dream house, I discussed some of the do’s and don’ts related to Bank Auction.
In this post, I will discuss the Bank Auction Process in detail. Currently Bank Auctions are occupied by some agents. Agents charge heavy commission in this whole process. I never suggest going through agents as the probability of cheating is high through agents.
Why is Property Auctioned?
I know that you all know the answer to this Que that property is auctioned because the borrower defaulted on payment. Normally the bank auction process is initiated when the borrower defaults on 3 consecutive Home Loan EMI’s.
A notice is served to the customer to respond within 60 days why the bank should not initiate an auction of property due to default in payment. Borrower can pay the installments and this notice is withdrawn.
Otherwise Borrower can submit his objection within 60 days with justification for non-payment of EMI. In case, no reply is received from the borrower or bank is not satisfied with the reply then the bank can initiate a bank auction process. Once this notice expires after 60 days, the bank can auction the property after 30 days.
Steps to Buy Property through Bank EAuctions
Step 1: Search for Bank Auction Property
This is one of the most painful steps as there is no organized data in India. You may find some sites providing information on Bank Auction Property. This information is normally available on a chargeable basis. These sites are not updated regularly. The other sources of information are Newspapers, Notice posted in Bank Branch or Notice posted in the Society.
Step 2: Check Property Details
Once you shortlist a bank auction property, carry out a preliminary check on our own. Check the market price of the property, obviously the reason for the bank auction is payment default but check out any legal dispute, bank auction related details and how you can participate in the bank auction.
The biggest problem with Bank Auction is that you will not have access to property papers before purchase for title search. Banks are not willing to share much information. Sole objective of the bank is to dispose of the property. If you are seriously interested in buying the property then it is advisable to hire a lawyer or expert for this process.
Step 3: Physically Inspect the Property
It is advisable to physically inspect the property. Nowadays banks have started mentioning the inspection date and time in auction notices. You can visit the site at designated time to inspect the property. In the e-auction notice you will find the contact details of the concerned officer. It is advisable to contact him and get all the details.
Step 4: Submit Tender Form
In this step, you can collect Tender Form and you should deposit EMD (Earnest Money Deposit) along with Tender form. EMD is normally deposited through Bankers Cheque or Demand Draft. Please check all details in tender form and submit your tender before the Tender Closing Date. Along with the Tender form, banks also demand KYC documents.
Step 5: Bidding
There are multiple ways of submitting your bid. You can submit your bid through a 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 through a tender form.
You have to submit a separate Tender form / bid form if you wish to submit multiple bids in multiple of bid amount.
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Step 6: Auction Date
On auction date, visit the site / bank / auction venue to check whether you won the bank auction or not. If bids are submitted through tender form / bid form then the bank will open all the eligible bids in front of all bidders. Highest bidder is declared winner of the bank auction.
If you win the auction then you need to deposit 25% of the bid amount within 24 hours including EMD deposited with the tender form. Balance 75% of bid amount should be deposited within 15 to 30 days from the date of bank auction.
If you are planning to avail Home Loan then it is advisable to apply for Home Loan from the bank which has auctioned the property. Normally home loans are risky and most bank auctions are closed without Home Loan.
Step 7: Sale Certificate
After the balance 75% payment is made. You will receive Sale Certificate from Bank but title transfer is incomplete till you register sale certificate in sub-registrar office.
Step 8: Register Sale Certificate in Sub-Registrar office
You can register a Sale Certificate and should insist on inclusion of the defaulter as a confirming party as I explained in my previous post on Bank Auctions. The sale certificate should be signed by the authorized bank executive at the time of property registration.
Important Points related to Bank Auction Process
- Bank Auction is scheduled after 30 days from the date of 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 period then your entire paid amount will be forfeited by the bank.
- Properties auctioned by PSU banks are cheaper compared to properties auctioned by Private banks.
- Last but not the least, Please avoid aggressive bids during the bidding process. To take care of this point, you should have a fair idea of the current market price of similar properties.
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Final Words:
Buying a property through a bank auction can be a rewarding yet challenging endeavor. It offers a cost-effective way to own your dream home, but the process requires careful planning, thorough research, and due diligence. By following the outlined steps from searching for auction properties to registering the sale certificate you can navigate the process with greater confidence.
Remember to avoid agents whenever possible, conduct a proper inspection, and ensure all legal aspects are in place before bidding. While the auction route can save you money, it demands patience, attention to detail, and a clear understanding of the risks involved.
As with any significant financial decision, staying informed and cautious is key. With the right approach and preparation, a bank auction property could very well become the perfect investment for your future.
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