Banks are auctioning over 2,000 residential properties and about 549 commercial ones in the next 30 days, according to Indian Banks Auctions Mortgaged Properties Information portal —
ibapi.in.
Bank of Baroda will hold a mega
e-auction on August 18.
Within the next seven days, banks are auctioning 1,101 residential properties, 267 commercial properties and 129 industrial ones.
In the next 30 days, banks have put on auction 2,036 residential properties, 549 commercial properties and 288 industrial ones.
The total residential properties listed for auction are 11,510, commercial properties 2,733, agricultural properties 1,335 while 12 banks are participating in the auction.
Perceptions regarding bank auctions
One of the main attractions of buying a bank auctioned property is that there there is a possibility of getting it at a substantial discount to the prevailing market price.
This is because the banks are interested in selling the property at the earliest and are primarily concerned with recovery of their dues which is usually lower that the value of the property. While on paper this may look attractive, in reality it may not be so.
This is because, while the reserve price may be low, there could be many bidders competing at the auction (especially in case of e-auctions ) and the highest bid could be close to the market price.
Secondly, the original owner of the property (defaulter) is entitled to get the surplus from the sales proceeds after the settlement of bank dues. Hence, it is in his interest that the property is sold at a higher price. An aggrieved defaulter has the right to approach the Debt Tribunal, challenging the action taken by the bank.
In such a case, the matter could get stuck in a long legal dispute which can go right up to Supreme Court. If the action taken by the bank is found to be wrong, the sale may also be cancelled. The bank needs to keep the original owner (defaulter’s) interest in mind while auctioning the property.
Clear title?
Another myth regarding bank auctioned properties is that since one is buying the property directly from the bank, the title would be absolutely clear. It should be noted that the properties are sold in auction on ‘As is where is basis’ and ‘As is what is basis’.
Hence, such properties are not different from the other properties being financed by the bank and the buyer will get the same title as the original owner (defaulter).
There is generally a perception that participation in an auction is a cumbersome process and only people with expertise and deep pockets can participate. This is not true, especially now, with online auction, even a common man can bid for such properties. Also, the ticket size for properties could be as low as Rs 10 lakh or even less.
Another point to be kept in mind is that many times due to financial constraints, the property may not have been properly maintained by the defaulter. Hence the buyer may have to incur substantial expense on repairs and restoration of such property.