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Pinellas, Pasco hold foreclosure auctions online; Hillsborough, Hernando to follow

The sale of foreclosed homes, long distinguished by quick-talking auctioneers, scratchy microphones and raised-hand bids, is moving from the courthouse steps to cyberspace.

Within the next year, Hillsborough and Hernando counties expect to join Pasco, Pinellas and 20 other Florida counties in shifting sales online. The foreclosure-heavy state was the first in the nation to allow online sales, when the Legislature approved the practice in October 2008.

Officials say the online auctions save salaries, reduce paperwork and expand potential sales to bidders across the globe.

But the process is no less risky.

Bidders who fail to do their homework can lose their shirts if they buy properties encumbered by second mortgages or other liens.

This was also true of courthouse auctions. Online, potential bidders are warned multiple times to check whether a property has multiple liens. Buyers must check a box acknowledging the warning before bidding.

"It's up to the people to do due diligence," said Lloyd McClelland, head of Plantation-based Realauction.com, which handles the online auctions in Florida. "Investing is not for the novice. It's an awful lot of work to do to make sure you don't lose money."

The firm has listed nearly 200,000 properties for auction and sold 11,131. For about half the listings, bids have not exceeded the minimum price demanded by the lender.

The online sales have eliminated jostling among courthouse bidders. Experienced buyers can no longer collude with others to outbid inexperienced buyers.

"It's way better," said Jon Jantomaso, who recently paid $56,000 for a St. Petersburg home. "The old-timers used to play a lot of games down there."

Jantomaso of Seminole has bought several homes online and described the process as "pretty easy and self-explanatory." But he did extensive research before buying.

"There's a little bit of a learning curve," he said. "You can get stuck with someone's old mortgage and bills."

An Orlando accountant submitted a $20,000 deposit for a home on which there was a mortgage for $220,000. After the bidding ended, he discovered a homeowners association had foreclosed for delinquent fees, the Orlando Sentinel reported in February. John Dey lost his deposit.

"I said, 'Oh, my God,' " he told the newspaper. "I just all of sudden lost $20,000. I'm sick to my stomach." He added: "At least it's not $200,000."

The Florida attorney general has received several consumer complaints from bidders who thought they were getting bargains and instead bought worthless properties saddled with liens.

Pasco County has sold 415 homes since it started online auctions in late 2009; Pinellas began in October and has sold 184 properties. Prior to the switch, two employees handled auctions in the courthouse lobby; now one worker monitors the online site while the other helps clear a backlog in another department.

The pool of buyers has become more diverse. The same group usually showed up for courthouse auctions. Although Pinellas County doesn't track where buyers live, officials are seeing more out-of-state purchasers, said Marie Wilson, assistant manager of civil records.

"It's working well for us," she said. "It has eliminated a lot of manual processes. So far, we don't have any complaints."

Hernando County expects to hold online sales for tax liens before September, and foreclosure sales sometime next year.

"It's in our technology plan," Clerk of Courts Karen Nicolai said. "It's definitely a priority to do."

Bidders can browse properties in all Florida counties after registering on the website. In Pinellas, that would be at www.pinellas.realforeclose.com; Pasco would be www.pasco.realforeclose.com.

Each listing has links to property appraiser reports and street-level maps. In order to bid, buyers must pay at least a 5 percent refundable deposit via wire transfer, electronic check or in person at the clerk's office. Buyers also enter a maximum bid and can chose to let the computer increase the bid as more buyers make offers.

Online sales are high in Miami-Dade, Lee and Broward counties — areas with some of the highest foreclosure rates in the country. Miami-Dade has sold 3,215, McClelland said. He hopes to expand the online auctions to other states plagued by foreclosures.

"It's a great way for the counties to save money," he said.

Miami-Dade Clerk of Courts Harvey Ruvin agreed.

That county started online auctions in January 2010 and expects to save $750,000 annually by decreasing the number of employees who handle the auctions from the courthouse-steps from 23 to 8. The system, Ruvin said, handles more sales and is helping clear one of the worst backlogs of foreclosure cases in the country. He expects more Florida counties to make the switch.

"Any time you can serve a customer online rather than in line is better," Ruvin said. "This is an important part of the recovery."

He likes that auctions attract buyers from afar, adding: "We get bidders from around the world."

Mark Puente can be reached at mpuente@sptimes.com or (727) 893-8459. Follow him at Twitter at twitter.com/markapuente.

Pinellas, Pasco hold foreclosure auctions online; Hillsborough, Hernando to follow 05/19/11 [Last modified: Thursday, May 19, 2011 10:05pm]
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