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Wednesday, May 13, 2009 6:04 PM


Condo Auction Ends Abruptly Due To Low Bids


Bids for condos at City Federal Condominium Auction Ends Abruptly Due To Low Bids.

The owner of the City Federal condo tower abruptly halted an absolute auction of 20 units in the building after just 11 sold, saying the bids were too low.

Condos that had been on the market for $239,000 to $935,000 ended up selling for $80,000 to $320,000.

Atlanta-based Synergy Realty Services LLC exercised its right to end the auction at any time, even before the 20 condos National Auction Group had advertised it would be selling. A two-bedroom, two-bathroom condo on the 16th floor selling for $80,000 proved to be the last straw.

Randy Herron, principal with Synergy, said he believes the auction generated interest in the building and hopes it will lead to more sales of condos at regular prices.

Bobby Wells purchased the only penthouse to sell. He picked up the three-bedroom, three and one-half bathroom condo on the 23rd floor for $320,000, nearly one-third of the original asking price.

"I didn't like that it ended because I was planning on buying some more," Wells said. "I am happy with the deal I got."
Assuming the building is well maintained, $80,000 for a two bedroom City Federal Condo in a historic district in downtown Birmingham does seem like a bargain, especially for someone working in the downtown area. However, the hope that the "auction generated interest in the building [that will] lead to more sales of condos at regular prices" is a bit far-fetched. Who is going to offer $935,000 or even $635,000 for something that just sold for $320,000?

There were plenty of bidders and I think every unit would have sold had the auction continued, so the floor may be in. However, it may take years before prices return to as much as 50% of what the owner thinks is "regular pricing".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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