Risks To Look At While Buying An Auctioned Home

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Home ? Blogs ? Risks to look at while buying an
auctioned home Risks To Look At While Buying
An Auctioned Home In Realty Affairs
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Reclaimed properties sold by the banks can appear
to be stealing for the bargain hunters but these
come with their own risk set. The buyers should
remember that the banks do assert on the property
put up for the auction which is actually
restricted to outstanding loans against it.
Hence, base price is determined by the remaining
amount. This certainly explains that the
auctioned property generally goes at a discount
to prevail the market rate and the discount can
be high as 30 in the same case. Retail
investors, however, ?nd it pretty di?cult to bid
properties as high net worth the realty
investors corner them the help of agents, bank
managers, etc. The introduction though online
auction platforms which has made the process more
transparent now, the risk involved with the
properties remain. The properties auctioned on as
is, where is the basis. This basically means
that the bank in the question will not only take
the responsibility should issues arise with the
future property. This is certainly opposite of
normal house buying deed, where the home buyers
can put the clause while asking the sellers to
indemnify the home buyers from the encumbrance on
the property before the registration date. As
these auctioned properties are coming with the
clause, banks do not take any responsibility. The
prospective home buyers require ensuring the
risk which is commensurate the discount they are
actually getting. In other words, the investors
of the auctioned properties require being
careful. Using risk- return norm, these should
understand that the rate is cheap as the
associated risks. Looking closer to possible
risks the interested parties might come across
and tips to mitigate them. Loans from other
lenders The bank auctions the property will
cover the dues, but there is no guarantee to the
similar property which is not mortgaged with the
other lenders. The problem is more accurate on
the land parcel then the constructed housing
?ats or on the commercial properties. This is as
the most lenders maintain original sale
agreement, no objection and share certi?cates
from residential societies, etc. and thus, one
gets a fair idea by getting the details from
there. One has to independently verify in
addition to documents provided by the banks with
other agencies such as tax authorities,
municipalities, etc. for being the land sold.
Since the country does not have a unique
property ID, it will actually be di?cult to
locate mortgages linked to property from
available land documents.
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Also, ensure that if there is a joint property,
all the owners are co-borrowers for loan and
hence bound by auction process by the bank. Other
owners can actually create the trouble
later. Other outstanding dues Though bank will
recover the dues completely from bid amount, the
bid winner has to bear all related liabilities
on the property such as pending society dues,
property tax, electricity bills, etc. sometimes,
the dues can actually be the probability that
borrower might have the default on other
expenses before that. Meeting the members of the
society and ask them about the pending dues is
the way is going about it. One has, however,
verify other dues such as gas bills, electricity
bills, etc. yourself. Pending of stamp duty
claims that the previous owner has shown lesser
value at the time of registration and department
has raised claims on that, can be a different
issue. This can be checked by comparing value
shown with prevailing prices in that area for the
under- construction properties, some dues may be
pending towards builder, thus check it directly
with the builder. Property titles Usually, it
is supposed that property titles are somewhat
clear as the banks have lent against it already.
This might not turn true, however. With the
competition picking up, there are various
examples of banks which are leading against the
properties with not many clear titles. For
example, for building that does not have
occupation certi?cates. Even the banks might have
actually taken full protection at the time of
providing leans, impropriety might happen
later. For instance, the builder may have
actually constructed more than the allowed by the
original plan. Complete buildings occupation
certi?cate is sensibly safe and the property
title issues ?gure more under-construction
properties or for the land parcels. The buyers
must ensure that the projects are approved
completely and the developer is moving as per the
approved plan. Even if one is buying from the
developer, one needs to check the historical
documents. RERA has made life somewhat easy for
the new house buyers but all the properties
coming up for the auction are the non-RERA ones.
Hire any realty lawyer and vet all the
transaction for reasonable time period such as
least for over 30 years and ensure that there are
no such legal tangles involved. Tenants in the
house
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The chances of previous owners staying in the
house are less as the banks generally ask them
to vacate in advance to auctioning the property.
If it is still let out, however, tenants may
actually be staying in-house and becomes the
responsibility to evict them. Releasing the
house of the tenant is pretty di?cult in India,
especially the tenant has been staying there for
long. The best strategy here is to ignore a house
which is occupied already. Physical
condition Present owners will stop paying
towards the upkeep of the property once these
realize they are going to lose it. Even before
the property is auctioned, existing owners might
actually stop maintaining due to the ?nancial
stress. While these are not big issues, one needs
to visit the house and locality to assess
situations. Take the help of a good civil
engineer to assess work to be done I the
apartment and to the building. If the developer
is not maintained properly, it certainly has to
be renovated as well as the new owner, one will
be asked to contribute. Also, it provides for the
substantial amount of money for maintenance and
repairs after getting possession.
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