People take a home loan to buy a house by pledging with their property bank. When the customer is unable to repay the loan, the lender sells the property to make up for the loss. Strong buyers bid for such properties and are sold through auction. The price of such properties is 25-30 percent less than the market price. Due to the price being lower than the market price, many customers want to buy such properties. The property being auctioned is a risky investment, so consider every aspect closely before investing money. In this article, we are going to tell you the safe and best way to buy the property being auctioned.
Buy auctions in these ways
If you are planning to buy the property being auctioned, then you should have a lot of cash. Cash is required to purchase the property being auctioned. At a minimum, you must have a minimum of 25 percent cash of the property value. On the auction day, 25 percent of the property value has to be given to the lender within 24 hours. If you have less money at that time, not only will the property go out of your hands, but the advance payment you have given will also make it difficult to get back from the lender.
Find online or view ad in newspaper
When you are ready with the money, then find the properties that are being auctioned. Banks usually place advertisements for such properties on newspapers or on some websites. Keep an eye on all such websites. It is good that you subscribe to the newsletters of these websites so that if the property is being auctioned at your favorite place, then you will be the first to know. You can also set your favorite place and prize range.
If you have found the property of your choice then it is important that you investigate it thoroughly. Do check out his legal titles. When the bank auction a property, the bank does not have its legal titles. The bank never takes legal responsibility for the property. It is advisable to get the property papers examined by an experienced lawyer. For this you will have to pay a little money, but this will save you from big losses in future.
Go visit the property yourself
When you are satisfied with the legal titles of the property, then go and inspect the property yourself. Before inspecting the property, you will have to talk to the bank and take a date, on which day you will go to see the property. While inspecting the property, you have to see that there is no bank notice on the property. With this, also check the status of the property like how long it has been vacant, whether the bank has taken a position or the defaulter is staying in it. It is important that the bank has a physical position of the property. Many times, banks start the auction process from a symbolic position only through a notice. If you buy such properties, you may face difficulty in getting the position of the house.
Fill the tender form with EMD
If you are also satisfied with the physical verification of the property, then you will have to fill the tender with EMD (earnest money). EMD is a type of property tax paid to a bank or financial institution to prove that you are a serious bidder. While depositing EMD, take the receipt.
Submit bid form
This is the form in which you tell how much you want to buy the property. Your stated amount can be multiplier of any amount above the bank’s reversed prize or reserve prize. The reserve price of a property is the price that the bank offers and it is the lowest price. You can also write a prize range in the bid form. If a bidder bids more than your price, you will lose. You can bid online by going yourself or if there is e-auction. You have to fill the online bid form. You can change the bid at any time.
The bank will notify you after your bid is submitted successfully. If you turn out to be a successful bidder, the bank will ask you to deposit 25 percent of the bid amount within 24 hours. This 25 percent will also include the earnest money you submitted along with the tender form. If you are not able to deposit this amount, not only the property but also the EMD amount will also go by hand. Your EMD amount will be forfeited and there will be a lot of difficulty in getting back from the lender. If you want to buy an auction property for a home loan, then get a pre approval home loan for the property being auctioned. If the bank disallows your loan application, then you will lose the entire amount that you have given till now. On top of all this, the bank will give you 15-20 days to repay the remaining amount. So if you are thinking of buying a property being auctioned through a home loan, then you should be sure about its availability.
The next step to buy auction property is to get a cell certificate from the lender. When you pay 100 percent of the property, then the lender gives you a cell certificate. This is evidence that a transaction has taken place between the buyer and the seller.
Sale certificate registration
The last step of this process is the bank auction property registration which is done at the Sub Registrar Office. Some banks say that your cell certificate is sufficient for the position of the house, but this is not true. Until property is not registered in your name, till then it is not legally yours. The certificate should be signed by the bank officials and it should be registered later.