High real estate prices, particularly in a city like Mumbai, seem to defy the theory of 'correction'. Prices seldom budge from their lofty highs, feel buyers, especially those with inflexible budgets. The prices may at best soften a bit or a developer may offer some extra facilities in lieu of reduced rates. Therefore, the common perception is that negotiations apart, there is very little home buyers can do to buy a flat in their budget. There is yet another, relatively less explored way of buying properties at discounted rates – through auctions of repossessed assets conducted by banks. Essentially, these are properties taken over by banks after the original borrower defaulted on the repayment. Likewise, you can also keep an eye on properties that corporates may put on the block owing to their changed requirements. In such auctions, you can hope to buy properties at rates that are 15-20% lower than the prevailing market rate. This could depend on several factors like location, neighbourhood, quality of construction, social infrastructure, etc. Some properties, however, could quote a premium, depending on such factors.
If you are scouring for cheaper prices, you could keep a close watch on advertisements in newspapers. Banks and housing finance institutions may issue a public notice about the sale of such properties in regional and English newspapers.
The advertisement will mention how to take part in the auction. The auctioneers may also facilitate a visit to such properties. You may have to shell out an earnest fee – a deposit amount – too. Another advantage of buying auctioned properties would be blemish-free title deeds, since the bank would have ascertained their legitimacy. Nevertheless, you would do well to do your due diligence, particularly in case of properties where corporates have defaulted, as these could come with multiple liens. Also, do not assume that your winning quote covers the total cost of buying the property. Make enquiries from the builder or the housing society's secretary about outstanding dues, if any. Insist on a letter clarifying this aspect from all these parties to avoid claims in future.
