Despite the dire news about the South Florida real estate market that the press propagates from day to day, much of it true, there are still homeowners in South Florida, as well as other parts of Florida and the nation, who refuse to believe that their homes have actually decreased in value — although they have seen the selling prices of neighboring homes drop by 30% or more.
The results, according to Zillow, are that the disbelieving group of homeowners in South Florida who purchased before the bubble burst in 2006 are typically pricing their homes anywhere from 9 to 12% over market value. Interestingly, the disbelieving South Florida homeowners who purchased after 2007, after prices had tumbled, tend to price their homes at close to 14% over market value. The net result for such homeowners from Boca Raton to Fort Lauderdale to Miami, is that their houses stagnate on the market from several months to several years.
Overpriced homes cover all price ranges.
Stubborn homeowners in South Florida are not confined to any particular price range. Realtors in South Florida are holding listings on smaller homes that are inland, as well as luxurious waterfront mansions that refuse to sell. The simple reason is that these South Florida homeowners refuse to hew to market conditions.
Many homeowners, from Boca Raton to Fort Lauderdale to Miami, are overpriced just because they are upside-down and don’t way to bring money to the table at closing. However, they do not want to short sale their South Florida homes—because that will affect their credit rating for 2 years or more – so they maintain the illusion that some special buyer will love their house in South Florida enough to pay over market prices for it.
Mortgages may be a problem overpriced homes.
Unfortunately, even if this belief were true, and that special buyer for this overpriced South Florida property existed, a competent home appraiser will dash that dream in a minute by checking comparative prices and delivering a very decisive “No” when that buyer is applying for a mortgage.
Cash buyers expect larger discounts.
As for cash buyers in South Florida, who don’t have to worry about mortgage appraisals, they are searching for bargains. Those with cash in hand expect a larger discount than those who come with legitimate mortgages, even when the homes in South Florida are priced at market.
So for those homeowners in Boca Raton, Fort Lauderdale, Miami, or anywhere else, who are holding on to the dream of selling their South Florida homes at prices beyond reality – it’s time to get over it.
According to real estate pundits, the Boca Raton, Fort Lauderdale and Miami markets are not due for significant rate rises anytime in the near future. If those overpriced sellers of South Florida homes actually need to move, they should look into the short sale process, which several banks are making easier.
Marc Jablon, The Jablon Team
RE/MAX Complete Solutions