Within the next few days, several of Florida’s 67 counties are expected to select software packages they will use to conduct foreclosure sales online.

After near-unanimous approval by Florida’s two legislative branches in late April, Gov. Charlie Crist signed Bill 773 into law on June 17, which made Florida the first state in the country to allow its courts to conduct electronic foreclosure auctions. That bill went into effect yesterday.

What drove the passage of this bill is the sheer volume of foreclosures that is inundating Florida’s court system. RealtyTrac, which monitors foreclosure activity nationwide, reported recently that Florida had more foreclosures in May—37,264—than any other state outside of California. Florida’s foreclosures that month were 72 percent higher than in May 2007, the firm estimates. 

“If we would have tried to introduce this two years ago, the clerks would have thought we were nuts,” says Lloyd McClendon, president of Realauction.com, a Plantation, Fla.-based company that specializes in the marketing and sale of delinquent tax certificates. “Now, the clerks are going crazy and don’t have the staffs for all of the foreclosures and tax deed sales they’re handling.” Realauction, says McClendon, was instrumental in shepherding Bill 773 through Florida’s House and Senate, and is now one of a slew of service providers vying for the courts’ electronic foreclosure auction business. 


Prior to passage of this bill, county clerks were required by law to conduct foreclosure sales on the premises of their courthouses, which became increasingly cumbersome as the number of foreclosures has accelerated. Myles Harrington, president of the Pittsburgh-based service provider Grant Street Group, observes that it’s not uncommon for counties to assign four full-time people to handle foreclosure and tax collection proceedings. R.B. “Chips” Shore, who is Manatee County’s court clerk, tells BUILDER that physical auctions also tend to limit the number of bidders who participate. “The same 20 to 30 people always show up,” he says. (Other sources say collusion and bid-rigging are not unheard of at physical auctions, either.) Electronic auctions “will allow more people to bid,” says Shore, and the new statute allows multiple auctions to take place simultaneously. Shore thinks electronic auctions will raise the purchase price for foreclosure homes. (He expects to choose which software package his county will use for online auctions by next Tuesday.) 

If online auctions for foreclosure are so much more efficient, why aren’t more states trying them? For one thing, explains McClendon, such auctions require a change in the statute. Harrington adds that, within an electronic auction environment, county clerks would need to “get comfortable with the compromises they’d need to make,” such as accepting automated clearinghouse funds as payment, as opposed to, say, a cashier’s check presented at the courthouse steps by a bidder. (Florida’s statute also allows the counties to accept electronic deposits.) 

McClendon points to other benefits of Internet auctions, which include providing bidders with maps, photos, and scanned documents about the property up for sale; and establishing a secure, tamper-proof and even playing field.  

It remains to be seen if Florida becomes a springboard for electronic auctions in other states. But McClendon points out that since 2004, when Florida first allowed delinquent tax bills to be auctioned online, nearly 50 counties are conducting electronic tax auctions, as well as counties in Arizona, Colorado and Illinois. “This has a tendency of catching on quickly,” he says. Harrington adds that companies like his, which already have a national presence in auctioning financial instruments (including bill, note, and bond sales for Freddie Mac), should be well-positioned to accommodate other states that embrace online foreclosure sales.

John Caulfield is a senior editor at BUILDER magazine.        

Learn more about markets featured in this article: Orlando, FL.