Photo: Ramesh Pathania/Mint
Photo: Ramesh Pathania/Mint

You can buy foreclosed property online

Both commercial and residential properties, financed by a loan, can be seized and auctioned by banks and other lenders if the borrower fails to pay three consecutive EMIs.

When you think about auctions, do you instantly picture a gavel-wielding auctioneer declaring some exotic artefact "sold"? If you do, you’re not too far from the truth, since auctions in India seem to have been an exclusive affair for the wealthy for the longest time. Auction houses routinely sell antique items and collectibles in sessions attended by keen collectors and connoisseurs. But do you know that auctions can also help you land bargains on properties?

Both commercial and residential properties, financed by a loan, can be seized and auctioned by banks and other lenders if the borrower fails to pay three consecutive EMIs. After three missed EMIs, the lender issues a 60-day notice to the borrower to raise an objection. Following this, if there is no objection from the borrower, the property is repossessed or foreclosed. The lender then puts up the property for auction to recover the dues. This is called foreclosure auction.

The lender publishes ads in leading newspapers calling for bids. Notifications are also put up on the lender’s website and other social media platforms 30 days before the auction.

The value of the property, determined by a lender-appointed valuer, is usually significantly lower than the market price of properties in the same category and area, since the price in this case is not artificially inflated.

To bid on a foreclosed property, you have to submit your sealed bid along with a minimum reserve price amount to the bank. Once the bidding period ends, the bank conducts the auction and sells the property to the highest bidder.

Bidding on a foreclosed property seems a complicated and inaccessible affair, but this is changing now. Online auctions or e-auctions are gaining popularity in India. Some property portals have taken up online auctions of reposessed properties under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act. Several banks have also started conducting online auctions by tying up with third-party auctioneers or property portals. 

A few sites like foreclosureindia.com and bankeauctions.com act as aggregators by listing various properties put up for auctions by different banks. These websites provide the basic details of the property, the contact information of the bank and the date of the auction. The properties are kept listed until they are sold. This gives you the ability to browse and select properties at one place instead of looking up every bank’s website or waiting for notifications. 

This has brought a higher degree of transparency to the process and put a lot of debate about the auction process being rigged to rest. 

However, there is still no way of ensuring that real estate sharks don’t enter the auctions and edge regular bidders out of the running. 

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