More Than 1450 Sign Up For Miamidade Foreclosed Property Auction
Written by Yudislaidy Fernandez on December 31, 2009
By Yudislaidy Fernandez
More than 1,450 investors have already signed up to bid on foreclosed properties in Miami-Dade’s first online auction set for Jan. 11, many more than the dozens who used to bid in the live courthouse auctions.
The new system is expected to reduce the growing backlog of foreclosure cases, with 7,000-plus new cases filed monthly. About 450 properties can be sold at in-person auctions each week due to personnel, space and time restrictions, but that number is projected to at least triple with the new online system, according to the Miami-Dade Clerk of Courts.
The Web site the county created for the foreclosure auctions, which went live Dec. 7, is accessible at all hours, allowing bidders time to do research on properties they are interested in bidding on through site links to case-file documents.
Users have to register on the site, where they can make deposits, place bids, monitor the auction and pay for their winnings.
Lloyd McClendon, chief executive officer of Plantation-headquartered Realauction.com, which has contracted to run the online auctions for eight counties in Florida so far, says the program has become more popular than expected.
"We figured we would have one county interested, but we were flooded with calls and had to scramble to get everything done," he said.
The company, which has been running auctions in Florida for 18 months now, recently got Broward County, another area heavily impacted by foreclosures, and Lee County to jump on board, he said. The firm is also in negotiations with Orange County.
So far, the feedback is mostly positive as focus groups have expressed to the company they don’t want to go back to the old system, Mr. McClendon said.
A handful of other counties in the state are in talks with Realauction.com, he said, "but have not gotten to the contract stage."
Founded in 2004, Realauction.com, with about 30 employees, provides government agencies with Web-based software and services to conduct online auctions for delinquent tax certificates, tax deeds and most recently foreclosure sales.
Adding a client like Miami-Dade, also badly hit by foreclosures, wasn’t a small task, Mr. McClendon says, as it took a lot of coordination. For example, the online auction provider is streamlining the county’s mailing process, as the final judgment for each case, generally five to 15 pages, has to be mailed to all parties — plaintiffs, defendants and lawyers.
But the online bidding process should be similar to a traditional auction, Mr. McClendon says. The first case is scheduled for 9 a.m. Jan. 11, and once it’s completed, the next case pops up, and so on. For those who wait to place a high bid within the last 30 seconds, an additional minute is added to the sale, he noted.
The company is also preparing to add new features similar to auction sites like eBay, notifying users of potential properties they might be interested in bidding on based on their previous activity.
Some other reasons many counties are favorable to taking foreclosure auctions online is to encourage more bidders to participate, as the in-person process was intimidating for some, Mr. McClendon explained.
"If you are a new person, you would walk in and be intimidated," he said. "It’s not uncommon for longtime bidders, who don’t want new participants, to give you wrong information, or intimidate you, or pretend to help you."
Tempers can also flare in physical sales, even leading to squabbles in the courthouse. Plus, he says it’s not uncommon for some bidders to make side deals.
"That’s bad for the homeowners and for the neighborhoods," he added.
Mr. McClendon envisioned selling foreclosed properties online years ago, but the need wasn’t there and it’s probable neither would have been the legislative support, he says.
But as the housing meltdown became a reality and foreclosures started piling up, Mr. McClendon successfully lobbied the Florida Legislature to make two key statute changes. One added language to permit electronic auctions and a second allowed for a required 5% deposit to be paid before instead of after the deal. The second prevents someone who is not local from buying the property and not coming through with the final purchase, he explained.
"The approval started in 2007 when foreclosures were starting to increase," Mr. McClendon said. "Had I tried to do this before, I would have probably not even gotten the support. It was a perfect storm of a lot of things happening…"
With more than 110,000 open foreclosure files in Miami-Dade — ranking third in the nation in foreclosure filings — the new online auction system is expected to save the courts money and increase productivity.
Miami-Dade Clerk Harvey Ruvin has said the new system is to free-up staff, before tied up with courthouse auctions, for other areas needed. Mr. Ruvin did not return calls.
Going from inline to online is to reduce the county’s case backlog and is calculated to save about 25,000 hours of labor annually, representing almost $750,000 in savings, according to the Clerk of Courts.
A more efficient system for moving foreclosure cases is getting big applause from community association attorneys as delays in the court system greatly affect their clients.
With hearing dates taking six to eight months to arrive, homes and condos either sit vacant or house delinquent occupants while the legal process drags on.
"I think once sales get done we’ll see immediate relief," says Steven Davis, shareholder at Becker & Poliakoff, a law firm that focuses on homeowner and community association law. "It’s not going to reduce the number of cases, but it shortens the time to finish a case."
The faster the foreclosure process ends and a new creditworthy buyer takes over the property, the better it is for the homeowner or condo association, which relies on association fees to operate.
"Because the process is taking so long, clients are not getting paid by unit owners. By expediting the process, we’ll get the owner out of there and get a new owner to pay dues faster," explained Rosa de la Camara, shareholder at Becker & Poliakoff. "It’s a tremendous amount of savings for them [the associations] and they can recover the money much quicker."
This also means savings for law firms and their clients, Mr. Davis says, because attorneys don’t have to spend hours at the live courthouse auctions. Anyone can register as a user to participate or simply view the online auctions.
"That translates into savings in client fees for the clients," he said. "It’s good all around."Details: www.miamidade.realforeclose.com.