The "Price Reduced" sign in front of a house is showing up more and more on properties listed for sale in South Florida .
The percentage of homes with price reductions in Palm Beach County has risen to 26 percent of the market compared with 22 percent at the beginning of the year, according to the real estate research firm Trulia Inc. In Broward County, the percentage inched up to 18 percent from 16 percent.
Of the homes listed for sale in select ZIP codes in early September, the proportion with the wet blanket of a price cut ranged from 6 percent in Boynton Beach to 30 percent in Boca Raton andHighland Beach. And the average size of those discounts ranged from 7 percent in Boynton to 14 percent in Boca/Highland Beach.
In Broward, 14 percent of the listings in Coral Springs/Parkland had price reductions, while a quarter of the listings in Fort Lauderdale had price cuts. The average size of the reductions in those areas was 11 percent.
With the posting of every new "Price Reduced" sign on a street, thousands of dollars in phantom equity disappear.
"What we look at is the potential wealth lost, and the amount of equity they [homeowners] thought they had and didn't," said Ken Shuman, a spokesman for Trulia. "But if you live on a street with five houses for sale, and three are bank owned, you're going to have to adjust your price."
Discounts have become commonplace in South Florida . The median sales price in Broward fell last month to $206,700, about what it was in early 2004. In Palm Beach County, the median dropped to $227,800, a price last seen in 2003.
Michael Citron, a real estate agent for RE/MAX ParkCreek in Coconut Creek, said the first 30 to 45 days are the most important for a new listing.
If it's priced too high, it won't get any offers, forcing the buyer to cut the price. A house with multiple price reductions tells buyers that something's wrong, Citron said.
He said many sellers often have unrealistic expectations about their asking prices. "I always tell my sellers to price the home at or ahead of the market so they don't have to chase the market," Citron said.
If you have to unload the property as a "short sale" — that is, for less money than is owed on the mortgage — some agents suggest dropping your price 5 percent to 10 percent every seven to 10 days. Those attempting to sell a moderately priced home under ordinary circumstances should look at the competition in the neighborhood and adjust accordingly.
Reprinted courtesy of The Sun-Sentinel: http://www.sun-sentinel.com/business/os-house-price-breaks-zip-20100927,0,381799.story
