The State Bank of India’s (SBI) e-auction of residential and commercial properties will take place on 12 June. This is the second such auction this year. In March, SBI had put up about 350 properties, worth 1,100-1,200 crore, for sale. The bank was able to sell 124 of these for 90-100 crore. Most of the properties sold were residential.

In this auction, SBI is offering around 479 properties, valued at around 1,261 crore, out of which 250 are residential properties, according to P.K. Malhotra, deputy managing director and group executive-stressed assets management, SBI.

The auction will take place online through websites of three companies—Magicbricks.com, e-Procurement Technologies Ltd and C1 India Pvt. Ltd. You can find the listings for this auction on the websites of Bankeauctions.com and Sbi.auctiontiger.net.

Various financial institutions auction properties. So, if you, too, want to buy a property this way, here’s what to know.

Knowing the property

These properties are usually priced a little lower than the market price. Most of these are likely to be for resale and be located in existing residential areas. “Bank auctions present potentially good opportunities—for instance, to acquire properties in locations that see very little supply otherwise," said Anuj Puri, chairman and country head, JLL India.

An interested buyer must know that these properties are usually sold on “as is where is" and “as is what is" basis. It could be that the property on offer is not in a good condition and you have to spend on repairs. Also, check for any outstanding dues such as property tax and electricity bill before participating. Banks do not include such dues in the price of the property; neither are these settled before the auction. It is a buyer’s duty to do the due diligence.

As mentioned in SBI’s bid notice, bidders should make their own independent inquiries regarding the encumbrances, title of properties put on auction and, claims, rights and dues affecting the property. It further says, “The property is being sold with all the existing and future encumbrances whether known or unknown to the bank."

Besides that, an associated risk can be delay in possession. Other participants may challenge the sanctity of the auction itself if they are not satisfied with its processes. Or, the owner of the property may approach a court if she feels that the property is being sold at a price far lower than the market price. Of the money that the bank gets from auctioning, say, a house, it keeps the outstanding dues and the rest goes to the owner. In case of litigation, possession of the property can get delayed or even cancelled.

How to track auctions

Earlier, one had to check newspapers to see notices of such auctions because such properties were usually advertised only in regional newspapers. Now various websites provide this information. You can visit websites such as Bankeauctions.com, ForeclosureIndia.com, and NPAsource.com, which list such properties across the country.

These portals have tie-ups with various banks. “Banks use our platform for publishing details of properties and also as a channel to buy. The mega e-auction trend is picking up as it gives visibility to banks," said Manu Malhotra, manager-marketing, C1 India. Currently, banks including Union Bank of India, Punjab National Bank and Andhra Bank have listed properties for e-auction. The deadlines for bidding vary.

How to participate

If you see a suitable property on auction, note down details such as the reserved price, date and time of auction, and date of inspection or visit. It’s better to inspect the property before buying. If you are satisfied with the property, then you have to make an earnest money deposit (EMD) with the bank. EMD is usually 5-10% of the reserved price. You also need to submit know-your-customer documents such as Permanent Account Number and address proof. All applicants also need to have a valid digital signature (you can approach the e-auctioneers or any other authorized agency to get this). After submitting the EMD and necessary documents, the e-auctioneer will send you a login and password. On that day, use these to enter the e-auction and place your bid, which you can increase as much as you like, but in specified tranches.

If you win the bid, you have to pay 25% of the bid amount (EMD gets adjusted) to the bank the same day. The balance 75% can usually be paid in 15-30 days. The bank will issue a certificate of sale only after the entire amount is paid. You can apply for a bank loan during this period.

For example, SBI is offering loans to successful bidders if they fulfil their loan eligibility criteria. It is better to have a pre-sanctioned loan letter as it will save crucial time.

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