Article Courtesy of The Sun Sentinel

By Paul Owers

Published November 27, 2012

Courthouse foreclosure auctions used to be free-for-alls.

Lawn chair-toting investors in Broward County would gather three times a week inside a lobby area marked off with yellow police tape. Palm Beach County held its auctions in the cafeteria, with sheriff's deputies needed to remove the occasional rebellious bidder.

From 10 a.m. to sometimes 7 p.m., county staffers would tediously call out case numbers. Seasoned investors often intimidated and misled novices, hoping to gain an advantage in the race to buy the most desirable homes.

"When we went online, it stopped all those shenanigans from happening," said Barbara Brown, Broward's court operations manager.

Nearly three years after Broward and Palm Beach counties moved foreclosure auctions to the Internet, officials say the change has eliminated backlogs and saved staff time and money.

The online auctions have helped reduce Broward's backlog of foreclosure cases to more than 20,000 from 80,000, Clerk of Courts Howard C. Forman said.

While lenders still file hundreds of new cases a month, Palm Beach County officials say they now can quickly auction homes that have made it through the court system.

The county used to have to schedule auctions nine months out because of the sheer volume of cases and limited staff resources, said Amy Stein, manager of Palm Beach County's foreclosure and tax deed department.

"It's so much better having it online," she said.

The Palm Beach County Clerk & Comptroller's office originally estimated online auctions would save 2,600 labor hours, or $57,000, a year. Stein said she did not have updated figures.

Forman couldn't provide a costs savings estimate, but he said the online auctions allow the county to redeploy six staffers at an average salary of $40,000 a year.

In Miami-Dade County, which also switched to online auctions, Clerk of Courts Harvey Ruvin said he redeployed 28 employees — at an average salary of $50,000, including benefits — which translates to a significant cost savings because it eliminates the need to hire additional workers.

The online auctions have been "enormously successful in a whole range of aspects," Ruvin said. 

Florida was the first state in the nation to put foreclosure sales online in 2010.

Participants enter their maximum bids. The system checks all bids and enters one on behalf of each participant at $100 more than the next highest bid. The typical auction takes about two minutes.

Broward partnered with RealAuction.com, a Plantation-based company, to oversee its sales. Palm Beach County uses Grant Street Group, a Pittsburgh-based firm. The two companies aren't paid by the counties and instead receive a fee from each winning bidder.

Registration is free, and the auctions are open to anyone with a computer. More than 10,800 people are registered to bid in Palm Beach County, while Broward has nearly 32,000 potential bidders.

The Internet sales broaden the pool of buyers, but they also open the foreclosure process to people who have made costly mistakes.

Despite warnings on the websites, some bidders who thought they were buying homes ended up with condominium liens or properties with second mortgages. That's been the only drawback so far, said Lloyd McClendon, president of RealAuction.com.

"Online auctions are super efficient, they really are," he said.