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Things You Must Know About Property Auctions

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Things You Must Know About Property Auctions

Investing in an auctioned property can be a risky affair unless the homebuyer knows the various things that need to be kept in mind before making the purchase

When thinking about purchasing an auctioned property, there are several precautions to be taken and proper research that needs to be done before making the final payment. In a situation when homeowners default on the loans that they have taken, banks can sell those properties through physical and electronic versions of auctions. RealtyNXT presents some of the most important things to know regarding auctioned properties for a seamless purchasing experience.

Clean Record Of Dues

One of the most crucial things to know about the property is whether there are any outstanding bills like society charges or local taxes. As the previous homeowner had failed to repay the loan, there are high chances that they must have kept several bills unpaid. As the property is sold by the bank, they take no responsibility to clear these dues and thus the prospective buyer has to take the responsibility. Making sure how much has to be paid for these charges before bidding for the property is a must to keep away any hassle during the final payment.

Keeping Funds Ready

Planning to keep the fund ready is essential for the bidder because, in the case of an auctioned property, the final bidder gets considerably less time to make the payment when compared to those who buy a new property. Failure to make the payment within the specified time period may lead to the loss of the earnest money deposit. Usually, banks instruct bidders to pay around 10 to 15 percent of the reserved price of the property as a deposit. When the final bidder is selected, they have to make the payment for another 15 percent. They have to pay the remaining amount within a month’s time.

Ensuring Legal Due Diligence

When banks auction a property, they do not become the owner of the property simply because they have taken possession of it. This implies that they shall not take any responsibility for the title of the property. Therefore, the bidder has to make sure that they get the ownership of the title after proper analysis and investigation by their lawyer. The legal due diligence which refers to the understanding and collecting of all the legal risks and documents associated with the property has to be properly taken care of.

Renovation Costs

In most cases, after the banks take possession of the property, they do not take any measures to keep it in a good state. It becomes the responsibility of the final bidder to take care of the costs that will be spent on the renovation and maintenance works. As the property is sold on an “as is basis”, any damage caused by a problem in the property towards other properties has to be compensated by the buyer. For example, if there is a leakage problem in the apartment and the apartment below it is being damaged because of that leakage, the buyer will have to pay for the damages caused. In case the previous homeowner has left behind any furniture or goods, the bidder has to clarify with the bank if they are entitled to own these materials or not.

No More Reclaims

One of the most asked questions regarding auctioned properties is whether the bank can reclaim the property in the near future or not. As recently issued by the Calcutta High Court, the banks that have sold the property do not have any more interest in the property after the issuance of the sale certificate. The title of the property remains attached to the purchaser only.

Dealing With Illegal Occupants

Auctioned properties might have illegal occupants living in them. After banks hand over the property, the responsibility of evicting any occupants in the property is of the purchaser. The former homeowner might have tenants inhabiting the property who might refuse to vacate. Thus it is suggested that interested bidders visit the property site once before bidding. This ensures that the purchaser does not face any trouble upon possession of the property.

ALSO READ: Must Know Facts About Occupancy Certificate

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