ATLANTA, GA - How do you find buyers for 6,000 unsold new condos in Atlanta? One way is to auction 35 or 40 units at a time. First on the block: 40 condos at Element at Atlantic Station. Developed by the Lane Co., Element was said to be sold out three years ago, but many of the contracts fell through.
Jon Gollinger, the co-founder of auction company Accelerated Marketing Partners, said he expects all 40 units to sell in about two hours Saturday.
Gollinger's company entered the Atlanta market last year, auctioning condos at Tribute in the Old Fourth Ward. The Tribute auction also advertised 40 units, but just 27 sold. A quarter of the condos were scratched beforehand due to lack of interest, and the auction was ended early when bidding turned sluggish.
Some Atlantic Station residents fear the Element auction will further depress values. Homeowners across the country are making payments on mortgages higher than what their dwellings are worth today because of plummeting values. That has led to property abandonments.
"It's certainly going to be difficult for some owners to justify paying a mortgage for a property that's worth 40 percent to 50 percent less than what they paid, especially if that loss is worsened because of a developer sponsored auction," said Element resident Vashon Brand.
Gollinger said it's "naive" to say auctions hurt values.
"The market is going to choose the value," he said. "If that value is a little bit lower than what people wanted, you're going to have to live with that. What would you rather do, live in a half-empty building? Live with renters instead of buyers?"
Brand said that "while [auctions] certainly create a short-term opportunity for buyers looking to live in town, they also have the potential to destabilize the economic landscape for homeowners and lenders who have a stake in the community already. That cannot be good for our local economy."
The Element auction begins at 1 p.m. at the W Hotel-Atlanta Downtown. On Sunday, 35 units at the Sterling of Dunwoody will be auctioned, beginning at 2 p.m. at the W Hotel-Perimeter Atlanta. Participants are required to register and bring a cashier's check to enter the auction rooms. See www.acceleratedmp.com/testauction.asp for more information.
Source: AJC.com