Posted by Damon L. Chavez on Friday, February 3rd, 2017 at 1:02pm.
February 1, 2017 / Denver Post - Real Estate, by Aldo Svaldi Denver’s Public Trustee office put down the gavel last year and moved its weekly foreclosure auctions entirely online — a first for Colorado.
“Denver is pushing the envelope in technological innovation,” said Denver Clerk and Recorder Debra Johnson, who had earlier implemented an online platform to process foreclosures.
Last summer, Johnson turned to Realauction.com, which runs foreclosure auctions throughout Florida, to provide Denver with its own auction site.
Aside from cost savings, the online auctions make it easier for investors to participate, which in theory should generate higher prices, something that helps both lenders and delinquent borrowers.
“What we do at the office is gather everyone around the conference table in front of a flat screen and bid on the properties as a team. Everybody can give their two cents,” said Joe Minnis, a partner of redevelopment with Delwest Capital Group in Denver, which buys about 60 foreclosures a year in the metro area.
That’s a big change from the old system, where investors had to register each week, present a cashier’s check for the deposit a day before and show up in person to bid. While at the auction, they had to follow strict rules against talking or using their cellphones.
Now investors register once and can deposit funds via wire transfers. They can participate from anywhere with internet access or set a maximum bid and go do something else.
“Now you can go to the auction in your pajamas. Or you can put in a proxy at your max bid and be laying on the beach somewhere,” Minnis said.
Under the new system, bidders don’t know who they are up against. It could be a hedge fund from New York with millions of dollars to invest or a young couple trying to pick up a bargain on their first home.
Denver housing economist Ryan McMaken said that could address concerns about collusion under the old system. Given that the same investors showed up week after week, there was fear that familiarity encouraged some to craft “understandings.”
As with other online auctions, bidders often wait until the final seconds to raise an offer. When a bid comes in within the final 30 seconds, the clock adds another minute, allowing time for a counter.
At the height of the foreclosure crisis in 2007, Denver’s Public Trustee office processed 8,240 foreclosure filings and employed 25 people. Auctions required five people to staff and could last 90 minutes. During the height of Occupy Wall Street, the events even attracted protests.
Last year, lenders filed only 720 foreclosure cases in Denver versus 9,158 foreclosure filings statewide. Across the state, foreclosures were down 18 percent last year.
But in Denver they rose 4.3 percent, the first time the city has seen an increase since 2007. That is just a blip, but Johnson said with the automated systems now in place, her office could handle the volumes of a decade ago with just two more people.
Johnson said she will pitch the online auction to other counties at an upcoming gathering in Denver. Realauction.com charges $40 per listing, and 13 counties in the state already use the company to sell tax liens.
Cost savings from moving document processing and the auction online are around $23,000 a year. Johnson said that having more properties to offer online would make the state more attractive to out-of-state investors. That would help in creating surpluses that go back to borrowers.
Last year, three-quarters of Denver foreclosure sales produced a surplus, generating $4.8 million for borrowers.
Anyone interested in participating in or watching Denver’s foreclosure auctions, which start at 10 a.m. on Thursdays, can visit the Public Trustee website. But don’t dally, they move fast.