A dream to own home sometimes gets ruined due to several factors but property auction is one out of many property buying options that can help you realize the same. A lot of prospects think that purchasing a property in such an event is a wise decision. However, the decision of buying a property in auction has several pros and cons. Hence, we have listed key things to remember while purchasing a property in auction event.
The biggest risk of buying auction property is uncleared due. A property that is listed for auction is believed to be the Non-Performing Asset [NPA] for the bank. Hence, the financial lender schedules an auction on the basis of As Is, Where Is. Under this concept, the property is open for a bid with the attached financial condition. For example, uncleared taxes, outstanding dues and more. So, if you are thinking about visiting a property auction to buy a home then check if all the dues are cleared or not.
Also, check if the loan on bank auction property is still pending or not. However, the chances are high that the owner must have defaulted home loan EMIs as it is the core issue for listing a property in auction by the bank. So, cross-check all these issues as the new owner is responsible to clear outstanding dues.
Another problem in buying bank auction property is its condition. The previous owner might not have taken proper care of property due to financial crunch. Hence, the property might require renovation. Hence, the new owner of a property purchased in an auction is responsible to bring back the property in good shape.
Another key thing to remember while buying a residential property in auction is that check if the asset is a mortgage with some other lender. A property is likely to be mortgaged to avail loans from any other financial lender. So, being a responsible buyer conduct a quick background search about the financial dues and financial condition of the previous owner.
This is an important thing to remember while purchasing a property in an auction as you might lose property due to legal issues.
As per the rules, the new owner is required to submit 1% TDS on property purchase. This law is applicable even on property purchased from an auction. However, this rule is mandatory to be follow if the property value is greater than Rs. 50 lakhs.
So, consider this tip if you plan to buy a property from an auction event as non-submission of taxes might land you in trouble.
Another important issue that a new owner has to deal with is illegal occupants. The previous owner might not have considered this as a serious issue but after paying a handsome amount you are required to ask the illegal occupants to vacate the property.
The illegal occupant here refers to tenant or a person living in the property without knowing that the property is listed for auction.
These are the major things to remember while buying a property in an auction because staying alert is better than feeling sorry. Also, these points help you invest in the right property as the immovable assets listed for auction are offered at a low price.