Banks issue a public notice in newspapers about the proposed auction and invite bids. The notice includes the details of the property, date, time and venue of the auction, reserve price, and earnest money deposit.
Bidders must submit their applications to the bank quoting their bid amount which should not be less than the reserve price. Along with this, they must pay earnest money deposit which may be around 10% of the reserve price. The auction usually takes place after 30 days from the date of the public notice
- If the borrower settles the dues within 30 days, the auction will not happen and your earnest money deposit will be returned.
- If the auction takes place and you do not win the bid, your earnest money deposit is returned.
- If you win the bid, you will have to pay around 25 per cent of the bid price on the day of the auction. You need to pay the balance amount within the next 15 days or an extended period agreed between you and the bank.
- If you win the bid but do not pay the required amount within the specified periods, you will lose the money paid earlier.
AUCTION INFORMATION SOURCES
- You will need to scan newspapers for announcements by banks regarding such auctions.
- You can contact real estate agents who may have this information.
- Web sites such as http://www.foreclosureindia.com/, http://indiabankauction.com/ http://bankpropertyauction.com/ provide online listings of properties which banks advertise to auction.
In a normal (offline) property auction, bidders gather at the auction venue where their bids are considered. Banks may also allow competitive bidding among the bidders for improving their offers.
CONSIDERATION BEFORE BIDDING
If the auction attracts aggressive bids, the price could go up and dilute the cost advantage. So, it is important that you make an assessment of the market value and bid prudently to get a good deal. Also, to be on the safer side, it is better to check the property documents before deciding to bid, or engage a lawyer to verify the title.
Also expenses on any repairs, renovation, unpaid property taxes, electricity dues and statutory liabilities will have to be borne by the buyer. The buyer also has to bear other expenses such as stamp duty and registration fees. So, do a proper inspection to assess the true cost of owning the property.