Pradeep Gaur/Mint
Pradeep Gaur/Mint

Get set for SBI’s third property e-auction

This is a good option for investors but end users may find the choice limited, and the money is required immediately

State Bank of India (SBI) will hold its third e-auction of residential and commercial properties on 11 September. This time, it is being held jointly by SBI and its associate State Bank of Travancore (SBT). The properties are those that were seized under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

“Around 625 properties valuing around 1,000 crore will be on offer this time. These will include offices, shops, apartments, factory buildings and others—residential properties will be 424 and commercial 201," said SBI’s official spokesperson. “Of the residential properties, 59, valuing around 40 crore are from SBT and the remaining from SBI. In the commercial properties, 11, of about 14 crore, are from SBT and the rest from SBI," the spokesperson added.

In March this year, SBI had around 350 properties valued at 1,100-1,200 crore in its first e-auction. Of these, 124 got sold, for 90-100 crore. In the second round in June, 479 properties including 250 residential, valued at around 1,261 crore, were on offer. Of these, 110 properties, including 75 residential, got sold for a total of 145 crore. Both times bidders showed more interest in residential properties.

Many banks are taking the e-auction route to recover value from non-performing assets. Recently, Dena Bank and Indian Bank also conducted e-auctions for properties on 31 August and 2 September, respectively.

The auction planned by SBI will be conducted online along with e-auction platform providers e-Procurement Technologies Ltd and C1 India Pvt. Ltd.

Rules of engagement

If you are interested in SBI’s e-auction, you can find the property listings on bankeauction.com and sbi.auctiontiger.net. Besides large scale e-auctions, many banks and financial institutions conduct property auctions in small numbers as well. If you plan to buy a property, these auctions could be a source.

Check for available properties either with banks or on auction portals. The auctioneer has to publish notices in two newspaper, one of which has to be a national daily and the other a newspaper in a regional language. Such notices can also be a good source of information for properties in your city. If you see something suitable, make a note of its details, such as reserve price, date and time of auction, and date of inspection or visit.

“Though there is certain level of security in such property deals, one should still do the required due diligence," said Dhruv Agarwala, chief executive officer and co-founder, PropTiger.com. Don’t rely only on the information provided by the institutions auctioning the property. Try to visit the property yourself. “Ideally, one should take the help of lawyers and property experts before participating in such auctions," said Agarwala. Doing so helps you ascertain the legal standing of the ownership of the property.

Apart from this, before participating in an auction, make sure that you have enough money to make a proper bid. If you make a winning bid, you will have to make an earnest money deposit (EMD) for it to the lender. EMD is usually 5-10% of the reserve price.

Along with EMD, you have to submit know-your-customer (KYC) documents. You also need to have a valid digital signature, for which you can approach the e-auctioneers or any other authorised agency. After submitting the EMD and necessary documents, you will get a login identity and password. On the day of bidding, you have to login to the e-auction website and place your bid. You can increase your bids in specified tranches, but unlimited times.

If you win, you have to pay 25% of the bid amount (EMD gets adjusted) to the bank immediately after the declaration, and the rest in 15-30 days. The bank issues a certificate of sale only after the entire amount is paid. You can apply for loan during this period; SBI, for instance, is offering loans to successful bidders if they fulfil its loan eligibility criteria. You could also get a pre-sanctioned loan letter, which will help you save crucial time.

If you are new to the process, the online platforms conducting the auction offer training modules free of cost.

Is it for you?

“Auctions are an interesting option for investors as they can get good bargains. But they should have expertise and ready funds. As only one or a few properties in a locality will be up, an end-user may not find enough choice," said Agarwala.

(Vivina Vishwanathan contributed to the story.)

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