NEW DELHI: Now you can buy or sell a house in an auction. Auction House India, a 50:50 joint venture between UK’s largest auction house for real estate Auction House and Delhi-based New Dimension Advisory, will conduct an auction to sell 31 houses and commercial property in the NCR region with a total reserve price of around Rs 130 crore.
This is the first time that homes will be sold via auction in the country, a departure from the practice of hiring local brokers. While the commission charged by an auction house is higher than that by a broker, the process is transparent and the entire paperwork, including legal checks, are carried out and certified by the auction house. Selling and buying property through auction is an established practice in the US, Europe and Australia.
The MD of Auction House India Saif Nawaz said the JV will use the experience of its UK partner to enable individuals to buy and sell real estate. “World over, this is considered to be the fastest mode of completing sale and purchase of a property at the best price.”
Nawaz said the auction house will soon expand to other metros. The second round of the auction in the NCR region is slotted for October.
At present, if one wants to sell or purchase a property, a local broker is needed to be hired. And the broker arranges a meeting between a buyer and a seller to negotiate and arrive at a final price.
An auction house charges 3% fee from the seller and 1% from the buyer (of the property price), while a broker charges 1% each from a buyer and a seller. When an auction house is involved, a seller offers a property and gets the ownership and other documents checked by its legal team.
Nawaz said once the papers are found to be in order, the auction house gets the property valued by its internal valuers. If the seller accepts the range of the value suggested by the valuers, the auction house lists the property for auction. The seller also suggests a reserve price, which is not disclosed, and below which the property cannot be sold. Buyers can visit the website of an auction house. They can visit the property and scrutinise the documents and if there are any doubts they can raise it with the auction house.
On the day of auction, the buyer needs to deposit 10% of the call price of the property. Once the hammer falls, the deal is completed.
Credits ET Realty