A bank auction property, as the name suggests, is a property which is repossessed by the bank from the home owner and auctioned in public domain to recover its dues from the property owner, who has defaulted on his home loan repayment for a specified number of EMIs. As these properties have been funded by the bank, the title to these properties is always clear. In this article, we will share everything related to buying a bank auction property.
The cost factor
Since bank repossessed properties are auctioned with the sole aim of recovering the total amount due from the borrowers, they are generally available for a price that is between 20-30% lower than the prevailing market rate of the property. The bank sets a reserve price at which the auction begins and ends when the highest bid price is quoted. However, the decision to sell the property to the highest bidder rests solely with the bank. In a scenario where even the reserve price is not matched after three auctions, the bank has the right to sell the property directly to a buyer at a price which at least meets the principal amount of the total dues. adani west bay offers world class premium apartments and lavish lifestyle
Location of the property is important
If you’re inclined towards buying a property in bank auction, search for those properties which are in a prime area available at a good discount to the prevailing market rate. Even after paying more for a prime location property as compared to a normal location bank auction property, you will still get it at a price that is lower than what you would have paid had you purchased it directly from the seller in an open market.
You get a ready possession property
More than 90% of bank auction residential properties are ready-to-move-in as the home owners were occupying them before they were dispossessed of the property by the bank. This eliminates the risks of project delays and waiting endlessly for possession of the property. Once you make the full payment and receive possession of the house, you can begin living in it right away.
Physically inspecting the property is important
Since bank auction house properties are available for sale on an “as-is-where-is” basis, you must make it a point to physically inspect the property in question to see what is the actual condition inside. If you have to spend a significant amount over and above the discounted pricing, then the very objective of buying a bank auction will not be met. However if the cost to make the property liveable is not much, then you can factor the same in your bid amount. Experience eye-pleasing view of the city from adani west bay andheri west
Do the property title due-diligence
While all bank auction house properties have a clear and marketable title, as the bank has done a complete on the same before disbursing the housing loan, it is still recommended that you get the due-diligence of the property’s title done by your property lawyer. The auction notice also mentions a clause where the bank absolves itself in the event of any third-party claim on the property after it is sold either in the auction or in direct sale. It is possible that the home owner may have fraudulently mortgaged it to another lender without the knowledge of the bank, and that lender also stakes a claim on the same property.
Check who has the possession of the property
Before you bid for the house property, you should physically confirm who has the physical possession of the property and whether it is empty or pre-occupied. If the bank has a symbolic and not physical possession of the property, it will be your responsibility to evict the property occupants after buying the property, which can be very difficult and take several years. Remember that the bank is cot classified as a goods or services supplier, so in the event of anything untoward happening, you cannot take the bank to court.