County uses online service to auction properties

Kern County, Calif., has begun using the Internet to auction tax-defaulted properties. The online auctions have helped the county reach more buyers than its local auctions and have generated greater revenue as a result.

Kern County averages 600 tax-defaulted properties on its books at any time, and it holds traditional real estate auctions to sell them and turn them into revenue-producing properties. However, the county holds local auctions only a few times a year because they are expensive and require a large number of county staff members. Furthermore, they net an average of only $4,000 per parcel.

In August 2000, the county’s tax-defaulted properties included 142 that the county had been unable to sell. “These properties were very difficult to sell,” says Phil Franey, Kern County treasurer/tax collector. “We couldn’t sell these at the last auction, and some had been held over from auctions before that.”

In September 2000, the county contracted with Silver Spring, Md.-based Bid4Assets to conduct a pilot sale of the tax-defaulted properties on the Internet. The county’s properties were listed on the company’s Web site for a four-week preview period, along with all available Due Diligence information (e.g., photos, maps, a zoning guide and tax and demographic information).

During the preview period, the company conducted a marketing campaign to promote the county’s sale. The company sent auction e-mail alerts to the Web site’s registered users, and it placed advertisements on real estate Web sites. It also placed advertisements in local publications, contacted local brokers and placed follow-up phone calls to likely bidders. In addition, a public relations campaign announcing the sale resulted in coverage in local and regional publications.

A two-day auction resulted in the sale of 11 properties, which netted $379,000 (an average of approximately $34,450 per property) for Kern County after paying the company a percentage of the revenue. The results were so successful that the county contracted with the company to conduct additional online auctions.

In January 2001, the company helped the county sell 309 out of 351 tax-defaulted properties. Thousands of registered bidders had examined parcel maps and Due Diligence materials, and 141 bidders from 21 states and three countries bid on the properties. The auction exceeded the county’s expected return by 211 percent, netting $652,243.

“We are thrilled with the results of the online auction,” Franey says. “The online auction format allowed us to promote the properties to a larger buying audience, while reducing the staff time and expenses necessary to conduct a physical auction. The whole process helped us achieve a maximum value for the properties offered and generate funds for county services.”

For more information, visit the Kern County Treasurer/Tax Collector’s Office Web site at bizweb.lightspeed.net/~kcttc/index.html.