As Philadelphia Sheriff’s Office moves to online sales, City Council doubts deepen

After a year’s hiatus due to the pandemic, the Philadelphia Sheriff’s Office has resumed sales of properties that were foreclosed on, moving from in-person auctions conducted in a rented West Philadelphia conference room to an online vendor named Bid4Assets, based in Silver Spring, Md.

Sheriff Rochelle Bilal says the auctions are safe, convenient, and cost-effective, which will benefit the sellers — property owners who couldn’t keep up with tax payments or their mortgages.

City Council has its doubts.

Many council members worry that the move will encourage land speculators from out of town to grab properties in the city and increase gentrification. They are concerned that the technologically savvy will have an edge over Philadelphians without easy computer access and are questioning whether the Sheriff’s Office’s deal imposes too many fees on homeowners.

They’ve asked Bilal to hit the brakes until staffers can better grasp the impact online sales may have on properties and homeowners. The sheriff resisted.

“Despite the fact that Philadelphia is the poorest big city in America, guess what we’ve always been able to boast about: that we had a high rate of home ownership, particularly in the Black community,” said Cherelle L. Parker, chair of Council’s Labor and Civil Service Committee, at a five-hour-plus hearing last week on the sales.

Parker is concerned the online deal would lower that rate of homeownership by people of color and locals.

Kate Dugan, an attorney with Community Legal Services, was one of several people who urged caution last week. She represents homeowners currently undergoing the process of foreclosure, many of whom have had their properties listed on the Bid4Assets auction list.

“Help is on the way,” said Dugan, noting that Pennsylvania will be getting $350 million as part of the federal Housing Assistance Fund, part of the American Rescue Plan. “And that’s going to cover mortgages, it can cover property taxes, it can cover utilities, so it can really save a whole lot of homes.”

The Sheriff’s Office has been under intense scrutiny in the last few years as the department has been rife with lawsuits and accusations of poor money management. In addition to selling properties in foreclosure, the department transports prisoners to court and provides courthouse security. The Committee of Seventy, a government watchdog group, has called for its abolishment and suggested that other city offices could do its job better.

The longest-serving sheriff, John Green, went to prison in 2019, in part, because of the sheriff’s sales. Federal prosecutors accused him of selling the office to a supporter, James R. Davis, allowing him to advertise and run auctions, often no-bid work without written contracts. In return Davis paid bribes and made illegal campaign contributions. Davis received a 10-year sentence; Green’s guilty plea earned him five years in prison.

Bid4Assets, which has been in business since 1999, entered the Pennsylvania market in October with a contract to auction properties for Montgomery County. The site has since struck deals with Bucks, Berks, Monroe, and Adams counties.

The company does not charge the Philadelphia Sheriff’s Office for its services but places a buyer’s premium on all properties. Winner of a tax foreclosure would pay a premium of 10% of the property’s sale price to Bid4Assets. For mortgage foreclosures, the premium is 1.5%.

Everyone who wants to bid also has to deposit $1,500 before the start of a tax sale and $10,000 before the start of a mortgage sale. Those amounts are refundable if they do not win a bid that day. There is also a $35 deposit fee for each deposit made. Once a bid wins, a processing fee costs another $35.

Bilal clarified that homeowners whose homes are foreclosed on do not have to pay any of the fees. By law, for tax foreclosures, any money not used to settle overdue utilities or other delinquencies is returned to the homeowner.

Asked why the office didn’t build a system of its own, similar to what Allegheny County did when it went virtual last year, Bilal said that would have taken years to accomplish due to the volume of monthly sales, costing the taxpayers.

Sgt. Gina Dascola with the Allegheny County Sheriff’s Office said her office already had a contract with Microsoft Teams so it didn’t have to buy a new program. It did have to purchase a piece of software that allowed them to create PowerPoint presentations, and that cost them a onetime amount of $70.

For Montgomery County, where each property is subject to a $1,500 flat rate premium, the addition of Bid4Assets was a welcomed change, said Oscar Gamble, spokesperson for its sheriff. The premiums in the Philadelphia contract are in line with what Bid4Assets has charged the other counties it works with in Pennsylvania. Sheriff’s sales in Berks, Bucks, Monroe, and Adams are only for mortgage foreclosures.

“It cast a wider net since it’s all online. So we had a lot of people from out of state bidding, which we didn’t have before,” Gamble said. The office sold four times the normal amount of homes in their October sale, said Sheriff Sean Kilkenny in a November news release that noted buyers participated from New York and California.

Bucks County Sheriff Milt Warrell said his office will permanently be doing virtual sales.

“I am not looking at this as a pilot,” he said. “I’m looking at this as this is now how the Bucks County Sheriff’s Office operates.”

If the concern is that opening the sales to Bid4Assets’ quarter of a million registered users would lead to speculation by out-of-towners, that already happened a long time ago, said John Kromer, who was Philadelphia’s director of housing from 1992 to 2001.

“Outside investors, including investors from other countries, are already bidding on properties at sheriff’s sale. So, not going virtual is not going to prevent that,” said Kromer, a real estate consultant who ran for sheriff in 2011 on the platform that the office should be dissolved and its duties spread out to other agencies.

An Inquirer analysis of city real estate records back in 2013 found that of roughly 100,000 tax-delinquent properties, more than half — at least 57,500 — were owned by investors not occupants.

Kromer said he would rather see the entire sale of these homes go to the Philadelphia Redevelopment Authority and Philadelphia Housing Development Corporation.