Bank e-auctions have changed the face of sale and purchase of industrial property in India. Bank E-auctions enable buyers and sellers to effortlessly conduct the transaction of industrial properties that are subject to an auction due to a default on repayment of loans.
In this article, we will take a deep dive into how you can buy and sell an industrial property through bank e-auctions, what are its benefits and risks for both buyers and sellers, and some important things to keep in mind while buying or selling a property as a buyer or seller respectively.
Bank E-Auctions In Industrial Properties Explained
Bank e-Auction is an online auction platform where different properties, whose ownership has been taken over by banks as their owners failed to repay loans, get sold. These properties are held by banks, which put them up for public bidding to recoup money from borrowers who have defaulted.
This also enables banks to target a larger pool of buyers whilst providing a more equitable and transparent process for prospective buyers to bid on the property through an e–auction. E-auctions offer buyers the chance to acquire industrial assets at a possibly lower than fair market value price point.
So here are some of the reasons that will compel you to buy industrial property in India through Bank E-Auctions.
Benefits of acquiring manufacturing property through a financial institution e-auction:
- Ability to Buy for Less
Bank e-auction industrial properties are acquired at below professionally estimated prices Given that banks are more concerned with securing outstanding debts than getting the highest price possible, this will see some very aggressive starting bids.
E-auctions offer a distinct benefit to buyers that intend to add an industrial foot-print or get hold of new properties at a competitive price
- Transparency and Convenience
Bank e-auctions provide a public auction process, meaning anyone who participates will be able to see the current bids in real time. By running a public auction, however, buyers can rest assured that they are bidding against their competition with a clear understanding of where the pricing lies — unlike some private sales in which figures and negotiations can be less than transparent.
Besides it, e-auctions does not require buyers to physically visit the auction venues. Buyers can now browse, register, and bid on properties from a distance with an internet connection — making the entire process easier and quicker.
- Diverse Range of Properties
Industrial Properties: Bank e-auctions include all types of industrial properties like factories, warehouses and manufacturing units as per the region where you are looking for. When you are looking for industrial property to buy, it allows new buyers to browse through options that fit the area or price tag they might be interested in.
This variation allows purchasers the opportunity to find distinct types of industrial properties without needing to deal with various buy channels or agents.
- Secure Transactions
Banks are regulated entities so you are safe as compared to buying through unverified sources or third partitions from the propery market typically eaucuit unverified, 3rd partis you – en-at had not seen (blood important). The property is being sold by a reputable institution, so buyers can trust the legality and documentation provided by the bank.
How to Purchase Industrial Property through Bank E Auction
For those looking to buy industrial property through bank e-auction, here is a step by step process:
E-Auction Portals– Banks usually have their own e-auction portals or may list the properties on a government-approved portal. You can find upcoming auctions at the bank’s web site along with properties up for grabs.
Research and Inspect: Explore property specs, complete information such as the area, base price, location details and inspection date of the property. Before the auction, banks typically agree to let potential purchasers inspect the home beforehand, which enables assessing its condition and market value.
Under Registration and Documentations: In order to take part in the bidding, you have to register on e-auction platform along with documents for identification and KYC (Know Your Customer) verification process.
EMD: An Auction typically needs an Earnest Money Deposit (normally 5-10% of the basic price) to show that you are serious about bidding. That deposit is given back to you if they do not win the bid.
Bid: On auction day, sign into the platform and place your bid. Be aware of other bids and modify your bid accordingly. The property will be sold to the highest bidder, subject to a reserve price being met at the end of the auction.
Last Payment and Paperwork If you win, you’ll have to pay the rest of your payment within a limited time period. The final step in this process is transferring ownership once the payment goes through, after which your name will appear on a deed to the property from your bank.
Acquiring Industrial Property through Bank E-Auction : Risks and Challenges
There is concrete benefitHowever, there might also be an associated risk:
- Condition and upkeep of the property
Note: Most of the industrial properties offered at bank e-auctions are foreclosed assets, may not be kept up. Many of these properties will be in need of major repairs or renovations which might increase the total cost you have to invest.
- Legal and Ownership Issues
Legal issues, disputes or unpaid dues for the industrial properties While banks will offer to sell it with a clean title, it is still prudent to seek the advice of a legal professional to ensure that there are no burdens against the property.
- Failure To Forfeit Earnest Money Deposit
In case you do not manage to win the auction, your EMD is refundable. But when you win and do not make the payment in time, can lose the EMD. This means that bidders must have cash on hand to complete the transaction, if they win.
- Limited Financing Options
When it comes to auctioned industrial property, banks will tend to be more reluctant to provide you with a loan, as not every financial institution is comfortable lending money for industrial assets. Bidders should make financing arrangements or other funds available prior to bidding.
Bank E-Auctions: Selling Industrial Property
When secured creditors need to sell off their industrial properties, bank e-auctions can be a quick and effective way by which sellers or borrowers who want to get rid of borrowed assets have resolved debts. If one appoints the bank to e-auction a property, then the dues of its credit can be settled amicably and quickly, imparting some relief in debt or at least flexibility in settlement.
Benefits for Sellers:
Reduced Time for Sale: E-audits decrease timeframes in selling assets, giving sellers the opportunity to pay off debts and overall reduce their financial liabilities.
Wide Reach: Bank e-auctions pull in a wide pool of people, meaning you stand better chances of finding a buyer and are likely to do so faster as compared to conventional sales channels.
Transparent Process: e-auctions are by their nature transparent, which are advantageous to sellers because they can rest assured that their assets are being sold in a fair and open bidding atmosphere.
Challenges for Sellers:
Pricing Constraints: The minimum bid is frequently determined near the level of the existing debt, and this could be beneath what the property would bring in on the open market leading to reduced profits for the vendor.
Legals: Sellers will now have to arrange with banks for all legal documentation & title clearances before the property is listed through auction.
Conclusion
Purchasing or divesting of industrial property by way of bank e-auctions can be both lucrative for buyers in terms of an opportunity to purchase both high value assets/ properties at a competitive price and for sellers whom gain benefits from quick settlements of their debts. The catch is that it must be well prepared, do your due diligence and have the money to take all risks with this auction platform. With ample research, guidance from legal professionals, and an assessment of the condition and legality of the property being auctioned, both buyers and sellers can use the e-auction process to achieve their objectives in Indiaั้งs competitive industrial real estate market.
