Buy property at discount in auctions, ensure title is unencumbered

Here is a guide to help you complete the bidding process smoothly while leaving enough in your pocket to refurbish the property after you get possession

Auctions of repossessed properties draw a lot of buyers because they can acquire property at cheaper prices than the prevailing market rate. But buyers must watch out for the risks in this route.

When borrowers default on loan repayments, the lending banks seize (or repossess) their properties. Under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act, 2002, banks are allowed to auction off “repossessed” or “stressed” properties to recoup their losses. 

These properties are sold off at prices that are typically 20-30 per cent lower than the prevailing market rates.

For banks, repossessing a property is not