Miami-Dade, Broward and Palm Beach counties are moving toward eBay-style online foreclosure auctions with a hope that it can speed up the selling process and reduce the distressed property glut.
Miami-Dade went live with its Web site Monday and plans its first auction for Jan. 11. Palm Beach County has scheduled its first online auction Jan. 21. And Broward is working toward a February launch.
The online auction system is designed to open up the bidding process to anyone with Internet access. With more bidders and a more efficient system, officials hope to push through the backlog of foreclosures faster than holding the traditional auctions at county court houses. And getting through that glut is a necessary step for the residential real estate market to recover.
“We were doing around 750 per week,” said Harvey Ruvin, clerk of the Circuit and County Courts of Miami-Dade County, referring to property auctions. “That ought to be at least doubled, and maybe tripled once we get going with our five-day-a-week auctions online.”
The Miami-Dade area ranks third in the nation in foreclosure filings with some 110,000 open foreclosure files and it’s seeing 7,000 new filings a month.
“The more people that you can get bidding and the more information you can get out to the bidders, generally the more efficient the auction process,” said Andrea Hueson, who teaches real estate and real estate finance at the University of Miami.
Duval, Charlotte, Manatee, Walton, Lee, Broward, Bay, Okaloosa, Sarasota, Pasco, Volusia and Miami-Dade counties all hired the Fort Lauderdale-based RealAuction.com to install and run their systems. Palm Beach went with the Grant Street Group, a Pittsburgh company.
Florida law changed in July 2008 to allow the online sale of foreclosed properties. Until then, bidders had to show up at the county court offices to have a chance at a distressed property. That process is normally dominated by a group of locals who show up every day, and many times collude to make sure they get the best deals, experts said.
In North Florida, Duval County, which has about 1,200 foreclosure filings month, saw maybe 10 or so bidders every day before going to the online auctions in November 2008, said Justin Portlock, a special assistant to the court clerk in charge of foreclosures. Now, they have 500 registered bidders, he said.
“I would say it has exponentially helped foreclosures,” Portlock said.
Still, there are drawbacks. Many more novices who don’t understand the foreclosures get involved when auctions are online. And the auction comes at the end of the process after the foreclosed owners, banks and judges have all wended their way through the legal proceedings. So there’s only so much auctioning properties online can speed up the process.
“Is it the end all be all?” said real estate consultant Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. “The answer is: Absolutely not!”
There’s still a tsunami of foreclosures expected next year that will last around 18 months, he said.