SBI to e-auction over 300 properties on March 14

On Saturday, property buyers will have an interesting opportunity to buy houses, factories or commercial plots in an e-auction of 300 properties, a first of its kind, by State Bank of India (SBI).

The auction is being conducted for the country’s largest bank by Ahmedabad-based Auction Tiger, and properties are listed on the website. “While we have been selling properties regularly, we felt the benefit was going only to a few. Since the price is slightly less than the market price, we felt a mega auction would help in better price discovery. Also, these sales will be entirely through cheque transaction,” said P K Malhotra, deputy managing director, stressed assets group, SBI.

For those willing to do some groundwork and settle for a property that might not be in mint condition, buying a resale one in an auction can be quite profitable. For instance, a flat in Kemps Corner, Mumbai is listed at Rs 38,265/sq ft on magicbricks under the auction. Although it is difficult to ascertain the market value of a resale property, experts said this price seemed low for South Mumbai, where prices can rise to Rs 50,000/sq ft or higher.

Which is why the biggest advantage of buying a property through an auction is that buyers can sometimes get a good price. And, for a property which might otherwise not be available for sale.

Procedure, issues
Before an auction, a bank first lists the properties it wishes to sell on its website and other websites if it has any tie-ups. Bidders are given time to inspect the site and check the condition. Once they have shortlisted the property, they have to pay the earnest money deposit through a demand draft or NEFT/RTGS. Payment through cheque is not allowed. SBI has fixed the equated monthly instalment at 10 per cent of the reserve price. The bank is also offering loans for buying these properties in cases where it is possible.

According to the SBI website, bidders must have a valid digital certificate with e-auction login ID and password to be able to participate. You can get a digital certificate from companies like e-Mudhra by presenting documents for identity and address proof. The certificate helps to confirm the bidder’s identity. It is mandatory for some e-auctions.

The advantage of an e-auction over a regular offline one is that buyers can do the bidding in the comfort of their home or office. The process is more transparent and quicker. It also allows the seller, the bank in this case, to reach a wider audience.

The bank has listed the requirements, such as the internet speed, the kind of browser required and so on. An hour has been allotted for the bidding. When you log in, you can see the competitive bids placed by other bidders but cannot see the bidders. You can revise your price accordingly.

Since these are properties mortgaged with the bank, many are in prime locations, where supply is limited. And, since the bank is conducting the auction, the legal issues and documentation are taken care of. Buyers can take help from experts, such as the local real estate broker, to get an idea of the prices in that area before a bid.

It is tough in that buyers have to put up reserve money upfront and get digital signatures but a mega auction’s purpose is also to gather feedback from bidders. Going ahead, the bank might hold auctions for specific classes of properties, such as home, commercial or industrial.

With non-banking financial companies (NBFCs) being allowed to use the Sarfaesi Act (for repossession in case of loan defaults), there could be more such properties coming for auctions in the future. “NBFCs have already started talking to us and we expect them to put up properties for auction, too,” said Jayesh Chaudhary, director, marketing and corporate affairs, Auction Tiger.

Points to check if you are participating in an e-auction

  • Make a digital certificate which will serve as identity proof. It is mandatory for some auctions
  • Inspect the properties listed and shortlist the one you want to buy
  • Check with the local real estate broker to know the right value of the property
  • Arrange funds for earnest money deposit; payment to be made only through DD, NEFT/RTGS
  • Ensure that you have good internet connectivity
  • If you are logging in through a cyber cafe, make sure that there are no firewalls or anti-virus due to which the site may be blocked