The real estate market has softened in Orange County, California, as it has in most of the United States. In Orange County the median price for all types of homes (single family residences, condominiums, and new construction) was $630,000 in April 2007.  This was down 0.6% from a year ago.  Statistically that may be insignicant as a lot of different factors affect what the median is for any particular month.

If more high price homes sell in a particular month than condominiums the median would be higher and vice versa.  With the collaspe of the sub-prime mortgage market and other lenders tightening up on their guidelines, it could be keeping many first-time buyers out of the market.

Let's just say it is a flat market pricewise.  Now, are sellers netting the same proceeds after the sale that they did when it was a sellers market?

No, they are netting less.  Before they could list their home, put it on the MLS, and probably sell it within a week.  Discount commissions were common as their was no incentive to offer a buyers agent what is considered a market rate.  Homes were sold as-is, since there was no incentive to fix them up beforehand or to agree to buyer requests for repairs.  Stick a sign in the ground and sell it.

Today, there is increased inventory on the market and the sales of homes is down to 73.5% (Orange County, CA data) of what it was a year ago.  Sellers now need to realize they need to do more to have their home sell.  Also their listing agent needs to do more marketing and advertising.

Sellers may still get the same price that they could have realized a year or two before.  That is what the median price data from DataQuick and other services tell us.  That may appear as good news.  However it is what the sellers net after the sale when all expenses are considered.

Selling commissions are now higher.  On the listing side the agent needs to do more work and spend more money on advertising and marketing.  On the buyers agent side a market rate commission needs to be offered, if the house is to receive many showings.  With greater inventory the buyers agent can select those properties offering the highest commission and ignore the rest.  Some may question the ethics of this, however it is commonplace.

Homes need to show well.  Buyers can be selective and only choose homes that are in good shape and show well.  That means sellers need to fix up their homes and make the necessary repairs that they have put off.  New paint, new carpet (unless an allowance is offered, which also affects the bottom line and the net amount received) and a possible kitchen remodel may be necessary.

More and more Realtors are now suggesting the use of a professional home stager to show the home with style.  This is particually important with vacant homes.  This may be another necessary expense to get the home sold.

Next come the concessions that the buyer makes with his offer.  The price may be right, however the buyer wants his closing costs paid or wants the seller to pay points to get the buyers interest rate reduced on this loan.  In todays market, after all the negotiations have settled, the seller usually has made some concession.

Then, the home inspection is conducted.  The inspector is certain to find several items that need to be fixed or replaced.  With only one offer and the uncertainity when another offer comes in, sellers are no longer in a position to say no, it is sold as-is.

In conclusion, in todays market sellers are obtaining the same price as before, however are paying higher commissions, staging fees, fix-up costs, accepting purchase concessions, and making repairs identified in the home inspection.  The bottom line is they are netting less. 

Real estate has always been a cyclical cycle business.  There have always been down times for sellers, however home ownership over a greater time period has always been a good investment, not to mention the tax advantages of home ownership.

Mike Stankewich, Realtor, Huntington Beach, Orange County, California

ZipRealty, Inc.

Huntington Beach Real Estate

Your Huntington Harbour, SeaCliff, and Seabridge Real Estate Expert in Huntington Beach

Surf City USA