Thinking about buying properties from auction market? There are few things that you need to understand are how auctions come about and what goes on at the credit or legal department of the banks before the property is put up for auction.
Auctions can be an excellent place to buying great properties at best possible prices, therefore, it is very important to understand the in’s and out’s of buying properties at auctions market.
Why the properties are put up for auction
The main reason that a property would put up for auction is that the borrower failed to pay the monthly loan installment on their property loans, then the moneylenders (could be bank, financial institution, cooperative and etc) has a right to recover their loans back once they have given a number of opportunities and legal notices to the concern borrower. Moneylenders will only put its property on public auctions when all other steps to recover the loans have failed.
The moneylenders are same with other businesses which is provide the certain services to making profits. Notwithstanding that they have take all the precautions, a certain percentage of housing loans are expected to turn bad. But, there could be countless reasons why this happens as the borrowers may fall through unexpected financial problems, that caused them no longer to service their loans.
So, to prevent this happens and protect their profits, the moneylenders will resort to public auctions to dispose the property and hence to recover the profits that they loss. Besides, the banks will decide the property sales prices based on the current property valuation. This way is seen to be “above board” and fair to the borrowers. For corporate bodies, they’re not taking the risks of breaking the law so they have to follow the proper legal procedures.
For moneylenders, selling the properties at auctions market is a time consuming processand valuable resources are wasted to recover their profits. While, the main goal of putting the properties for auction is not to maximize the best possible sales value for borrowers but is to recover their loss of profits and the other associated costs involved in the process of selling the property off in the market.