How to buy bank auction property?

Before going into procedures involved in buying a bank auction property, one should understand the reason why a real estate property is being auctioned by a bank. The main reason is that the borrower defaulted on repayment. Usually, banks initiate the auction process when the borrower defaults three consecutive home loan EMI‘s. Then a notice will be sent to the borrower to respond within 60 days citing a reason why the bank should not initiate auction due to default in payment. If the borrower pays the installment then the notice is withdrawn and if the borrower didn’t respond or the bank is not convinced with the borrower’s justification for non-repayment of EMI, then the auction process can be initiated.

The important thing to be noted here is that
* Notice period for the borrower is 60 days.
*After 60 days, the bank can auction property in 30 days.

STEPS TO BUY PROPERTY THROUGH BANK AUCTION.

•Step 1.Search for the Bank auction properties.

The most painful step in the entire process because in India we don’t have organized data regarding bank auction properties. So one can get access to the bank auction properties either through newspapers or through the notice in bank branches. Also, there are some sites giving details about bank auction properties, so one can go through those sites, choose a particular property and then contact the respective bank branch where this property is being set as auction property.

•Step 2.Check the property details

Once you have shortlisted the property, check for its market price, check the reason why the property is being auctioned, Is it really because of default in loan repayment or Is there are any other legal disputes.
One important thing to be noted here is banks wouldn’t give you access to the property papers before purchase, the sole reason for these banks just want to dispose of this property. If you are seriously interested in buying that property then hire a lawyer for this process.
In many cases, the balanced outstanding amount will be higher than the market price. If the property is auctioned for an amount less than the outstanding balance amount then the defaulter has to pay the difference amount to the bank. But if the property is auctioned at a price greater than the outstanding balance amount the bank will pay the defaulter the excess amount.

•Step 3.Physical Inspection of the property

It is advisable to physically inspect the property. Nowadays banks mention the inspection date in the auction notice.one can inspect the site at this designated time.
The important point to be noted in this stage is one should always buy such properties in which the bank has physical possession. once the auction process is over banks will be totally non-cooperative and the winner of the auction has to struggle to get the physical possession of the property doesn’t have that and it may take years and sometimes you will have to file a court case in worst cases.

• Step 4.Submit tender form

In this step, one has to submit a tender form along with the EMD(Earnest Money Deposit). usually, EMD is deposited as bankers cheque or demand draft. Along with the tender form one has to submit the KYC documents too.

•Step 5.Bidding

One can either bid through the bidding form or online. In most cases, the tender form and bid form are one and the same. You have to submit a separate tender/bid form if you want to submit multiple bids.

• Step 6.Auction date

On auction date visits the site/bank/auction venue to check whether you won or not. Bank will open the open all bids in front of the bidders and the highest bidder is the winner. The winner has to deposit 25% of the bid amount in 24 hours including EMD deposited along with the tender form. Balance 75% of the bid amount is to be deposited within 15 to 30 days from the date of bank auction.

• Step 7.Sale certificate and registration in the sub-register office.

After the balance, 75% payment is made one will receive a sale certificate from the bank but the transfer is incomplete till you register sale certificate in the sub-registrar office. The sale certificate should be signed by the authorized bank executive at the time of property registration.