Online foreclosure auctions 101: New Broward system will speed things up, but poses risks
Like its neighbors, Broward County is starting an electronic auction system that some real estate brokers say will speed up the process but poses risks for buyers.
“It’s like eBay!” one workshop attendee said in the fully packed foreclosure auction room at Broward County Courthouse yesterday. The woman was one of nearly 50 attendees at a workshop run by the Broward County Clerk of the Courts to explain the process to potential bidders in the county’s new online foreclosure auction system, to replace the live one March 30.
At yesterday’s workshop, the clerk’s office showed potential buyers how to make live bids and proxy bids, which allow people to make offers in advance.
The new Web site, www.broward.realforeclose.com, is hosted by www.realauction.com, which also provides the software and customer service. Bids require a 5 percent deposit of the bid amount, and failure to pay the full price by noon the next day means buyers forfeit their deposits.
Broward’s move to electronic auctions follows a similar move by Miami-Dade and Palm Beach counties, which both switched in January.
Many attendees asked similar questions, usually centered on whether their bids are private — which they are — and the process of beating the bank’s bid.
Plaintiff banks can post a so-called maximum bid — meaning once bidding exceeds that number, the bank cannot bid further.
Most importantly, prospective buyers must sign an electronic “buyer beware” agreement saying that they have done their research including inspecting the property, and that it is their responsibility, not the clerk’s, to check for other liens on the home.
Title problems make the electronic auctions potential hazards for buyers, said Lloyd Feinberg, a broker at Coldwell Banker in Hollywood, who works frequently with banks on foreclosure sales, though none of his clients have used the system yet.
“If buyers are going to dabble in these electronic foreclosure auctions, they have to be very careful. There are a lot of title issues on the properties that don’t come out on these electronic deals, it’s pretty risky.” Because there is little information on the electronic record, buyers may face problems in doing their research on homes, or knowing what other encumbrances there are on the property, like outstanding liens.
Feinberg said it would be in the bidders’ best interest to have an attorney look at the title issues before bidding.
“I think it’s probably going to speed the process. It’s for the municipalities’ benefits, because it’s so clogged up, but it’s a little dicey,” Feinberg said.
Early sentiment on the Web site, from those who attended the workshop, was mixed.
“The Web site is a little overwhelming,” said Brian Mullin, a Miami resident. “It’s intimidating. They’re talking about liens.”
Plantation resident Darlene Hnatiw said she found the workshop helpful.
“I can probably do it — once you know how to work the basic system and get into the Web site. It’s pretty well done.”