Monday, March 22, 2010
On-line foreclosure auctions
Florida was the first state to allow on-line foreclosure auctions in 2008. This came about because of a lobbying effort by Lloyd McClendon, the man behind Realauction.com. This company was started to auction tax certificates and now also runs foreclosure auctions for ten counties in Florida. I expect this trend to grow rapidly as budgets shrink and staff is cut. Realauction.com averages $35 per sale and takes its cut from the buyer.
Pinellas and Hillsborough counties still have their foreclosure auctions the old fashioned way, at the courthouse. There are only a handful of regular sale attendees, minimum bids are disclosed just before the start of the sale and bidders know who is bidding how much because they are standing next to each other. With on-line auctions the minimum bids are announced well ahead of time, maximum bids can be placed in advance and bids are anonymous. Rather than just showing up at the courthouse, bidders must register in advance for on-line sales as well as place adequate deposits ahead of time. With courthouse sales the balance of a winning bid is due the following day but the Pasco County on-line auction requires the balance by 4:00 PM the day of the sale.
As the on-line foreclosure auctions spread to more counties it will radically alter the way real estate investors approach this process. The on-line system draws bidders from a much wider pool in the counties where it has been implemented. Miami-Dade county now has nearly 4,500 Floridians registered to bid and almost 750 more out of state or international bidders. It is time for investors that bid at courthouse foreclosure auctions to start making plans for the shift to on-line bidding.