Mortgaged property auctioned by banks can be cheaper

Flipping through newspapers can be an interesting exercise for
property buyers. A number of banks give advertisements in these, at
rates which at first glance look much cheaper than the market one.

For instance, one advertisement for a property in Kandivali on the
outskirts of Mumbai says the floor price is Rs 25 lakh for a 1,000 sq
ft property. Whereas, the price of a 1,000 sq ft flat in Kandivali
would be close to Rs 1 crore or even more. What the advertisement
implies is that Rs 25 lakh is the minimum amount – called 'floor
price' for the flat. Flats will go through a process where other
buyers will bid as well.

So, what are these flats? Usually, these (mortgaged to banks, which
then auction these to recover their dues) are auctioned when buyers
are unable to pay their equated monthly instalments for an extended