Webinar presenter Jesse Loomis answered a number of your questions after his presentation, Conducting Online Sheriff Sales in the COVID -19 Era. Here are just a few of his responses.
Audience Question: Are you aware of any jurisdictions that require bidders to reside in the same state as the agency conducting the auction?
Jesse Loomis: In Missouri, tax foreclosures have a requirement that you either need to be in the state or assign a resident agent to be or your local rep for you to participate in Missouri tax foreclosures. I don’t know if that also applies to their sheriff sales. Outside of that, I’m not familiar with anywhere that public auctions limit to in-state or to local participation.
Audience Question: In Wisconsin, we do have posting requirements. How are those handled?
Jesse Loomis: Pretty much the same way that you’re handling them now. So, we don’t get involved in the presale noticing work. Really, the only difference to your pre-sale process is that instead of giving a physical address in the legal notice that you’re doing and the noticing you’re doing, you will say, it’s going to be handled at bid4assets.com slash your county name
Audience Question: Can you do a live or can an agency do a live and an online auction at the same time? Or is it really one of the other?
Jesse Loomis: There are a few companies who do this for personal property, and they are typically referred to as hybrid or simulcast auctions. Particularly in rural America, where they’re doing, a gun auction, a collectable antique signs, you know, all the stuff you see on American pickers auctions, there are also people bidding online because someone’s got a laptop and they’re doing it. I haven’t specifically seen this on public auctions or on real estate auctions. The online has really done a good job of replacing the local auctions because it’s not like online bidders aren’t going to come online and bid. That’s really why these auctions always go better when you go online, because whoever’s bidding now is still going to bid, and you’re going to add, whoever else, would be interested in bidding, but they didn’t know about the auction, or they couldn’t travel to be at the auction.
Audience Question: Does your system to take care of all of the money handling? We have a 10% down payment, the day of the sale, and a balance within 10 days of confirmation. Do you collect that 90% balance? How does that end up work?
Jesse Loomis: Yes. We can handle the presale and settlement collection. What I would probably recommend on a situation like that, I think I briefly touched on a county who is having us do a small paddle fee. I really do recommend that you have this sort of upfront deposit. Even if it’s a nominal amount to just make sure that people aren’t messing around online and they take it seriously, even if it’s $500 or one thousand dollars, in terms of this upfront deposit before your account is cleared to bid. So, what I might recommend if that’s the process that you want to keep with, is you have some let’s say, a thousand-dollar deposit, bidders have to put into escrow. And then, that lets them participate in your auction. Right after the auction, they will get an e-mail that breaks down for them the remaining balance due to make up 10% of the total amount that they’ve won. So, that, by the close of business, the day of the auction, we have a total of 10% of their winning bid amount. Then they’ll get additional payment instructions for, a settlement period of say 10 days to fund to Bid4Assets escrow account, via cashier’s checks or wire transfers. We audit the funds, and funds will come to your office 3 days after your settlement deadline. So, just to do a quick example with real numbers, if you wanted to have 10% on the day of the auction, and the remaining balance, within 10 days of the auctions close, an option could be to require one thousand dollars, pre-bidding deposit as a barrier to entry to participate. And then right after the auction, let’s say, you win $100,000 worth of property. Our system will tell you we need another $9000 to make sure that we collect 10% of the total. The wire will be sent the day of the auction and the next morning we will confirm that those funds have cleared. Then they’ve got 10 days to wire or send us a cashier’s check to our escrow account for the remaining $90,000. And then on day 13, 3 days after the payment deadline, all the vesting info, all the contact info, all the funds, everything is coming out to your office and you’re all set to prepare the sheriff deed to close this out.
Audience Question: Does bid for assets integrate with any financial management systems like Oracle?
Jesse Loomis: Our focus has been on the civil process software because that’s they have had all the data on the sheriff sales. If you are using Oracle, to manage any of the civil processes and that’s where you have the information that is needed to conduct a sheriff sales, then we would like to integrate with this system. We want to automate this as much as possible so that you can manage only the system, you’re already managing so that we’re not adding to your workload and there’s not a second system for you to manage.
Audience Question: We saw older mobile homes monthly that have a very small bidder pool, and therefore many times don’t recoup the delinquent tax amount. Have you had any experience with mobile homes, and do you get interest in those kinds of auctions?
Jesse Loomis: That’s been actually a large value add for us in the state of Washington. In Washington, we work with the counties at three levels. For treasurers, we do their tax sales, we do tax title, which is the surplus property that didn’t sell and we do what they call distraint, which is their mobile homes. As you know, old mobile homes are never going to have the level of interest that you know nice houses and condos and commercial properties have. But we’ve definitely expanded the pool of bidders and these counties have reported that they’re selling a lot more. You figure in our 750,000 bidders, we’ve got people who buy all types of real estate and when there’s enough of it, in a particular auction, we can also tailor some marketing. So, you can buy things like Google keywords if we want to reach people who are searching for mobile homes and have them come to a particular auction. So, we could definitely help with that.
Audience Question: Do you provide any post-sale processing assistance such as generating certificates of sale or deeds in calculating redemption periods?
Jesse Loomis: A sheriff that we’re working with has a post-sale statement of value form that buyers must complete, so we’re not only providing that form, we’re prefilling it with the necessary info on the buyer and the property info. In our initial demo, I always start by understanding your process. What are the fees? What are the paperwork? Together, we’ll discuss if there other parts of the process that we can provide you more value by automating paperwork and monotonous tasks.
Audience Question: If the winning bidder defaults, will the system recognize immediately and go to the next highest bid?
Jesse Loomis: There are a few ways this can be handled. After the payment deadline, and again, the payment deadline can be a little different for different counties, we have full audit trails of the bidders and could therefore go to backup bidders at your discretion. Montgomery County isn’t going to know until day 12 who are the defaulters, because they’re requiring a $10,000 deposit and then you have 12 days for the remainder. The gentleman who asked the question earlier may elect to have, a total of 10% the day of the auction. So, there are two different levels of default you can have. You can default by not funding the remainder of the balance, the day of the auction, or you can fund that 10% and then in the next 10 days, not fund the remainder of the 90%, but we don’t automatically go to back-up bidders. So we can go to backup bidders automatically if you instruct your account managers accordingly or you can review bids and make decisions on a case by case basis.
Audience Question: If the plaintiff is the high bidder, they typically pay us a 4% commission, can this continue?
Jesse Loomis: Yes, this will have no effect on that as far as what the plaintiff is paying you. The way that some of our counties are having this work is the cost amount will be the minimum bid and then the attorney can set an upset price. So, let’s say, the minimum bid is just $10,000. But the attorney says, if we’re going to have a third-party sale, you’ve got to get this to at least $100,000. So, if you were doing it that way at your live auction, there might not be a great deal of bidding. It might only get pushed up to, for example, $25,000. But if we’re increasing the bidding by bringing a lot of competition, even if it doesn’t meet the reserve, obviously, all these people bidding against that amount are going to push up the bidding. And you’re going to have 4% of what’s going to be a much larger fee and then ultimately if it doesn’t meet the reserve Bid4Assets isn’t getting paid. Because if the plaintiff takes it back, there’s no fee due to us. So, in a lot of cases, I think it’s going to happen that we’re driving more revenues for your agency and we’re not making ourselves any money. So, we’ve got to find, a highly motivated third-party bidder, or there’s no fee coming to Bid4Assets. In short, online auctions drive up the bidding and if you’re getting some poundage on that, that’s very good for your agency.
Click Here to Watch a Recording of Conducting Online Sheriff Sales in the COVID -19 Era.