Property auctions, although rare, are a great way to buy property. It’s different from the conventional approach to property procurement, but has worked wonders in the western markets, and seems to be catching speed in the Indian scenario as well. But, there is still a lot to be explained and understood when it comes to buying property through auctions. Many potential buyers and sellers in the traditional real estate market refrain from venturing into auctions because they do not understand its benefits. Of course, it may not suit everyone as each has a different need and business strategy. Yet, it doesn’t hurt to know as much as you can when it comes to real estate investment.
So, here we bring to you some of the fundamental highlights, benefits and technicalities related to property auctions.
- You can buy property as per you budget.
- Enjoy fair bidding and legal transactions.
- No negotiations and many ready to move projects.
- Many Choices: Pick the property that suits you most and choose from a large database of properties available for auctions.
- Refundable Fee: There is a fixed participation fee which is refunded if you lose the auction. If you win, the fee is appropriately adjusted in the price.
- Bid to Win: To win, all you need to focus on is keeping the bid competitive. This will increase your chances largely.
- Be a Winner: If your bid turns out to be highest, then you can own your dream home on the price that you gave!
HOW IT WORKS
The following is a point by point explanation and sequence of actions that take place in the auction:
- The seller shall list his property on the given portal/medium for selling.
- He or she mention the ‘Reserve Price’ which is the minimum price they expect for their property. This becomes the starting point for the bid.
- An interested party that wants to participate in the bid for purchase purposes shall then register on the same portal/medium by paying the required registration fee.
- The interested party should then try and adjust the bid, which is their full right, to try and win the property.
- At the end of the bidding process, the highest bidder is declared as the winner by a completely fair and transparent process that depends entirely on the sum quoted.
- In case the highest bidder is unable to claim the property for any reasons, the ownership is then automatically transferred to the next highest bidder. It is important to note that the registration fee of the highest bidder is forfeited in this case.
- It is also possible for the buyer to offer a price that is lower than the Reserve Price that is set by the seller. In this case, it is entirely dependent on the seller if they want to accept the lower price or reject it.
FINANCIAL POINTS FOR SELLER:
- The seller will have to pay a nominal amount for listing his/her property and the charges for marketing.
- If the seller’s property is successfully sold out in a particular auction, usually the organizer or intermediary charges an amount as ‘brokerage’ on the closing price from the seller.
FINANCIAL POINTS FOR BUYER:
- The buyer has to pay a registration fee to become eligible for bidding in the auction.
- If the buyer intends to bid for multiple properties, he or she will have to pay a separate amount for each.
- In case the bidder does not win at the auction, the full registration amount is refunded.
- Many such auctions are held online under secure conditions with transparent processing. In the case of online auctions, the payment and registration methods are slightly different:
- In case the bidder decides to make the payment online, the transaction charges are borne by him/her.
- The entire amount is refunded in the case of payments by Demand Draft. For the winners the fee amount is adjusted in the final payment of the property.
Taking into consideration all the features of the property auction process, it can be said that although such a process of buying real estate may not be suitable for everyone, it is highly profitable for some. In fact, there is evidence of rising interest in the auction process, and it is quite possible that in the near future more and more of the property selling will take place through online auctions. It offers a greater level of convenience and transparency.