The Rutherford Report: Online Auctions Improve Efficiency

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“Problems are not stop signs, they are guidelines.”

—Robert H. Schuller
Online Auctions Improve Efficiency

When the San Bernardino County Tax Collector held its last in-person, tax-defaulted property auction in 2002, it lasted five days.  

It was a lot of hard work and a lot of expense,” said Tax Sale Manager Kelly McKee, who has been handling the county’s tax sales for the past 20 years. “It took days and days just to do about 1,000 parcels.”

About 400 bidders pre-registered for the auction, which meant renting an even larger facility at the Orange Show in San Bernardino.

Because many bidders had a lot of cash on hand (they were required to have a $5,000 deposit in cash or cashier’s check), the Tax Collector had to hire sheriff’s deputies to provide security.

That last in-person auction was larger than the average tax sale, which usually attracted about 100 bidders, but the time and effort it took to arrange the auction exemplify why the Tax Collector has since upgraded to an online auction platform.

Now bidders simply register online for the auctions, which are held in May and August, and start bidding at pre-arranged times for properties. The County contracts with Grant Street Group—a software company based in Pennsylvania—to provide the online platform for the auctions.

“(Bidders) are from anywhere and everywhere,” McKee said. “We have people from other countries and from throughout the US bidding on properties.”

The auctions usually attract about 300 bidders, and the Tax Collector can sell several thousand parcels over the course of seven days.

Believe it or not, a computer isn’t even required to participate, but on-line bidders have an advantage. Off-line participants must submit their best and final offers for properties, but if the bids exceed that amount, there’s no way for them to increase their bid.

Bidders are still required to put down a $5,000 deposit, and they risk losing the money if they win a bid and then fail to pay in full for the property.

The Tax Collector begins the process of putting a property up for auction after a property owner has failed to pay a tax bill for five years. It often takes about seven years before a property is added to the auction roles.

About 90 percent of the parcels sold at auction are vacant land, and many of them also have other encumbrances, such as past-due assessments, that the new owners will have to deal with.

“The onus is on them to do all the research,” McKee said.        

McKee said she misses the personal interaction at the in-person auctions where she got to know a lot of real estate professionals, but she said the online platform is better.

“The set up and those long days were very tiring,” she said. “This is very cost effective and so much easier.”

Visit to learn more about the Tax Collector’s online property auction.
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