(Yicai) Dec. 2 -- As Chinese banks ramp up efforts to sell off seized real estate collateral, a slew of second-hand homes has flooded auction sites. Even with starting prices well below comparable homes, these discounted properties remain mostly unsold.

The financial assets section of JD.Com's auction platform shows that more than 9,000 such properties have gone into a second auction round, underscoring how the initial prices set by the banks failed to attract buyers.

For example, Ningxia Yellow River Rural Commercial Bank listed a home in Yinchuan for CNY620,000 (USD87,610) last month, but it did not sell. The lender listed the property again at CNY558,600, but no bidders have registered yet.

While the risks associated with banks selling foreclosed real estate collateral themselves are much lower than those for judicial auctions, they still present potential pitfalls for buyers, which damps down market interest, Li Yujia, chief researcher at the Guangdong Housing Policy Research Center, told Yicai.

“Whether listed on the bank’s website or on an asset trading platform, buyers must carefully review a property’s details and any ownership restrictions, such as pending legal disputes,” Li said. Beyond legal risks, these properties can pose post-sale difficulties, including negotiating with occupants such as elderly tenants to vacate the premises, he added.

For example, Guangdong Nanao Rural Commercial Bank is auctioning a 132.7-square-meter home for only CNY161,000 (USD22,770). Yicai learned from staff at the lender that legal ownership of the property cannot be officially updated and it is occupied by retirees, meaning the buyer would need to handle move-out arrangements personally.

Other factors suppressing demand include remote locations, the age of the buildings, and subpar conditions. On JD.Com's auction site most of these properties are located in remote provinces, such as Inner Mongolia Autonomous Region and Gansu.

Meanwhile, In more developed provinces, sluggish sales are typically linked to older properties. For instance, a property being auctioned by Shanwei Rural Commercial Bank in Shanwei, Guangdong province, has received no bids so far, partly because it is more than 30 years old.

Editors: Tang Shihua, Futura Costaglione