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Home / Money / Personal Finance /  Big investment option! SBI and BoB properties open for e-auction. Time to bid?
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Bank auctions typically generate huge interest as such units are more often priced lower than the existing market rates and can be enticing. State Bank of India (SBI) and Bank of Baroda (BoB) will do an e-auction of properties on 25 and 22 October respectively.  

“Your next big investment opportunity is here! Join us during the e-auction and place your best bid," SBI said in a tweet.

 

“Here’s your chance to buy a property you like! #BankofBaroda presents Mega e-Auction on 22nd October 2021, where you can get a property of your choice with ease," BoB tweeted.

 

The auction will include commercial as well as residential properties. These are basically mortgaged properties of defaulters and the bank is auctioning them to recover the dues.

Buying a house in an auction is sometimes very beneficial. “The auctioned house will be available at a lesser rate than the market price due to its DLC rate commitment by the government. However, there are some issues in the auctioned properties, as the procedure to auction property is a lengthy process and can take time as long as 1 year to finalize. Till then the property becomes damaged and this makes it an after services issue. Also sometimes a property has some dues on it such as maintenance charges or house tax which is to be paid by the owner and if a person buys that property he is then liable to pay those charges. These can be negatives of an auctioned property," said Amit Gupta, MD, SAG Infotech.

People get carried away as these properties are priced lower than the market price.

“ If you’re looking for a bargain & don’t mind some extra legwork - the potential benefits are that you might get a good deal on the purchase price & there might just be lesser competition towards those properties considering fewer people know how to buy a property through an auction. While not all properties may come with problems, bidders should be aware that such opportunities are not as straightforward as normal property purchases. From the legal due diligence to understanding if they have enough bandwidth for it, bank auctions should be viewed holistically,"Shruti Khandare, Chief Marketing Officer, MyFundBazaar India Private Limited said.

Buyers should also be aware of the risks involved in buying a property in an auction.

“While people assume that properties that banks auction have clear titles, on the contrary, an auction notice has a clause - no encumbrances exist on the property & the bank won’t be responsible for any unknown encumbrances or third party claims, rights or dues. Despite SBI having given addresses & sizes of properties, names & addresses of previous owners on its website, in case someone claims to be the owner of the property after the purchase, it is highly unlikely that the bank or institution will come to your rescue," said Shruti Khandare.

The terms and conditions for the properties that SBI is auctioning conveyed the risks that buyers needed to be aware of - the bank had also stated that the payment of all statutory and non-statutory dues, taxes, charges, fees and so on would be the sole responsibility of the bidder. “So if the previous owner had not paid dues on the property, the winning bidder would need to clear them. Moreover, these dues could end up neutralising the benefit of lower prices, attracting interest penalties if they are not paid on time. Besides, you may also need to spend extra on repairs and maintenance of the property," she added.

So, if you are planning to buy a property through a bank auction, do understand all the pros and cons before making a decision.

 

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