BLOG DETAILS

How to Buy a Property Under Bank Auction I 4 Important steps

Nov 16 2024

How to search for mortgaged properties listed by banks on platforms like IbapI and register on MSTC for online property auctions. Let me take you step by step through the entire process to help you successfully participate in such auctions.

Step 1: Understand the Auction Notice

When banks plan to auction properties, they publish a notice in newspapers and upload it on their websites. Carefully read this notice, as it contains:

  • Details of the borrower, the loan amount taken, and the outstanding balance.
  • The branch address and contact details.
  • Property location, along with boundaries (East, West, North, and South).
  • Important terms and conditions of the sale.

This notice provides nearly 25% of the information you need. Use it to gather initial insights and prepare thoroughly before bidding.

Step 2: Visit the Property

Contact the bank branch handling the auction and request permission for a site visit. Some banks organize group visits on a scheduled date—coordinate with them. Visiting the property allows you to verify its condition and location, completing 50% of your groundwork.

Step 3: Review Terms and Conditions

Thoroughly read the bank’s terms and conditions. These include:

  • Payment timelines, such as depositing 20% of the bid amount on the day of the auction.
  • The remaining 75% payment is generally due within 15 days.

Understanding these conditions ensures a smooth transaction.

Step 4: Research Independently

Despite the provided information, always conduct your research to assess the property’s market value, legal status, and feasibility.

Participating in MSTC Auctions

  1. Login to MSTC: Use your MSTC user ID to access your dashboard, where you can find property details, submit bids, and check auction results.

  2. Deposit EMD (Earnest Money Deposit): Submit 10% of the reserve price at least one day before the auction. Use MSTC’s dashboard to generate a challan and deposit the amount via RTGS/NEFT to the specified bank account.

  3. Track Properties: Each property on the platform has a unique ID. Copy this ID to search for the property on MSTC. Note that auction details are visible only after 5 PM on the day before the auction.

  4. Submit Your Bid: Add the property to your “Property of Interest” list. Place a bid higher than the reserve price and monitor its status.

  5. Winning the Auction: If you are the highest bidder, the bank will send you a confirmation email and contact you for completing the formalities.

Important Tips

  • Auctions follow strict timelines. Ensure all actions, such as bidding and payment, are completed within the prescribed time.
  • Be vigilant and use informed judgment before finalizing your purchase.

 

The process of purchasing mortgaged properties through online auctions has evolved significantly, with recent trends making it more accessible and efficient. Here’s how:

1. Enhanced Technology Integration

  • AI-Powered Valuation Tools: Banks and auction platforms now use artificial intelligence to provide realistic property valuations and risk analysis, helping buyers make informed decisions.
  • Mobile-Friendly Platforms: MSTC and similar portals have optimized their websites for mobile devices, allowing users to participate in auctions on the go.
  • Virtual Property Tours: Many platforms now offer virtual 3D tours of properties, saving buyers time and effort in physical visits.

2. Increased Transparency

  • Detailed Auction Notices: Recent RBI guidelines mandate banks to include comprehensive details in auction notices, such as prior encumbrances, pending litigations, and legal statuses.
  • Blockchain Integration: Some platforms are piloting blockchain technology to ensure tamper-proof property records, enhancing trust among bidders.

3. Simplified Payment Options

  • Digital Payment Gateways: Platforms like MSTC now accept payments through UPI, wallets, and instant RTGS/NEFT integrations, speeding up the EMD and bid submission process.
  • EMI Options for Winning Bidders: To encourage participation, some banks are collaborating with NBFCs to provide EMI options for auction winners to pay the remaining amount.

4. Expanding Auction Categories

  • Green Properties: Properties with eco-friendly certifications are increasingly being listed due to rising demand for sustainable real estate.
  • Smart Cities Listings: With government focus on smart cities, auctions now feature properties in these high-demand areas.

5. Buyer-Centric Policies

  • Grievance Redressal: Platforms now provide dedicated customer support and grievance mechanisms to address buyer concerns promptly.
  • Increased Inspection Window: Many banks now offer extended timelines for site visits, ensuring bidders have ample time for research.

6. Government Initiatives

  • Digital India Push: Online auctions have received a boost under the “Digital India” initiative, with simplified registration and bidding processes.
  • Affordable Housing Auctions: To support housing for all, banks now list more properties in the affordable housing segment at concessional reserve prices.

Pro Tips for Bidders in 2024

  1. Leverage Social Media: Platforms like Twitter and LinkedIn are increasingly used to announce auction updates and share success stories.
  2. Monitor FinTech Innovations: Apps and tools like AuctionWatch notify users about new listings matching their preferences.
  3. Explore Financing Trends: Look for lenders offering pre-approved loans for auctioned properties to streamline the purchase