Does anyone have experience in buying real estate thru auctions? what are the risks involved? Are any agents available to guide the buyer on this kind of transaction?
I don't have much experience in buying real estate auctions but buying a property that is auctioned may be risky for you. You have to avoid this kind of property, as the responsibility to evict the squatter from your future property will fall on you. This has to do with the fact that auctioned properties are sold on an ‘as is where is basis. Consequently, the buyer inherits everything, including encumbrances.
1. The bank that auctions the property will cover all its dues, but there is no guarantee that the same property is not mortgaged with other lenders. This problem is more acute on land parcels than constructed residential flats or on commercial properties.
2. The chance of earlier owners staying in the house is less because banks usually ask them to vacate before auctioning the property. However, if it is already let out, the tenants may be still staying in the house and it becomes your responsibility to evict them. Freeing a house of its tenant is difficult in India, especially if the tenant has been staying there for a long. The best strategy is to avoid a house that is already occupied.
There are several other risks so that you have to avoid that kind of property.