November 13, 2005 – Relinquishing a Stake in Orange County

November 13, 2005 – Relinquishing a Stake in Orange County

My wife IM and I are about to complete the sale of a home we purchased new in Orange County, California a couple of years ago. The selling process is a long and difficult process that is not unlike hunting. Your hunting party is all decked out in their camouflage hunting outfits loaded for bear and you begin your foray into the forest of real estate selling. I liken the process to sitting in a blind waiting for ducks to appear on a lake—which I’ve never done, but my friend Don Steele who was into hunting described to be me at length just before we sat down to a dinner of roast duck which his dear wife Evie prepared for us one evening at their lovely home in the Diamond Heights District of San Francisco.

Our wait in the duck blind has been ongoing on for the past five months with nary a duck to be seen. In an effort to keep our spirits up so that we wouldn’t loose patients in the process, our realtor would send us the latest statistics on the number of vacant homes in the Irvine section of Orange County, where our town home is located, what the asking price for each was, which homes had been sold, which had price reductions. Selling real estate is a difficult undertaking at which few who embark on the venture succeed. It’s a job done on evenings and weekends, though you’re expected to be available during regular business hours as well—the result is you never had any time that entirely your own, especially if you are anxious to succeed.

Our realtor had a track record of success with the company he works for—salesman of the year, etc. for several years. This is one good marker for picking a realtor—hiring someone with a track record of finding ducks and a rifle stock notched with lots of kills. IM has no patients with sales people of any kind and especially real estate agents. We’ve had only two others to compare our current agent against. Our first was particular good, by which I mean, “lucky,” barely a month after we listed with him, our home was sold. And he even kicked back some of his commission to make the sale work. Our second was a sales person from the home builder we purchased the home from. We liked them because they agreed to resell the house for a third the normal real estate sales commission.

Our second real estate experience had a couple of years ago when the market was experiencing a surge of growth and we had decided to sell just after the market peaked in the fall. The home went onto the market and languished for several months before we had anyone even showing interest. And just as we were about to give up, someone made an offer, slightly lower than our asking price, and we came to terms. The sale was completed six weeks later after a lengthy process of overcoming the buyers’ remorse as they applied for and eventually received creative financing to acquire the property.

This latest real estate transaction tested our patients to the limit as weekend after weekend of open house seemed to produce no results, lots of buyers viewing the property but none with any serious interest. Real estate markets are similar to all other financial markets. Buyers all get the notion to purchase at the same time and descend on realtors and new home builders en masse. It’s the same principle at the supermarket. Everyone converges on the market and ends up at the checkout lines at the same time. During the week, the phenomena is explained by normal business hours, but on the weekend when people all have the choice of when to descend on the supermarket or department store, they all converge at the same time.

Just as months before, buyers converged on Orange County property as soon as it became available. As a result there was little housing inventory on the market for any length of time. Now the same was happening in reverse. Seemingly all the buyers en masse decided to wait for the overheated market to cool down. Thus, we were stuck in our duck blind and all the ducks were well out of reach.

However, the lack of activity gave us reason to enjoy the property we had purchased and hadn’t lived up. We would drive south and rather than stay in a motel, we would live in our town home. It had a bed in the master bedroom, which we made up with linen, bedspread, and pillows. The water, gas and electricity were all active, as we needed to show the home. All that was missing was cable TV, a landline phone connection and high speed Internet. But never mind, we had cell phones and instead of TV we had a notebook PC with a DVD drive and plenty of DVD content to enjoy in place of TV. And we had books and magazines to fill the time when we weren’t playing with our grandkids and enjoying our daughter and son-in-law.

We bought bathroom towels and kitchen items for after dinner or early morning coffee and tea all in paper dishware for easy clean up. We had a broom and dustpan for indoor and outdoor maintenance. The bed was comfortable and IM and I discovered the joys of living somewhere different after over 30 years of living in San Jose and Irvine was a welcome change. The neighborhood was quiet and the rhythm of life was entirely different. We shopped at Albertson instead of Safeway, ate out instead of cooking at home, drove freeways we only knew as visitors but now for the moment perceived as a resident—they are more crowded but do move, though we’ve only seen them on weekends and holidays.

My jogging path was different as well: starting at San Canyon Avenue and Quail Hill Parkway then proceeding east and slightly south until it intersects Laguna Canyon Road, then south on until Laguna Canyon Road intersects Highway 133 and return the way I came. It’s shorter than my normal hour run by about 15 to 20 minutes, but it’s sidewalk all the way along Quail Hill with town homes and apartments on either side of the road, set back from the road by a 100 feet of greenbelt up a slight incline to my right on the outbound segment of my run. In fact the entire subdivision is on the side of a slight rise leading up to the mountains of the coast range that separates Irvine from the Laguna Beach on the Pacific Coast Highway, a 10- to 15-minute drive west on Highway 133. While the mountain side is rugged and covered with the brown flora of Southern California, baked by the rainless seasons of summer and fall, the well groomed flora along either side of Quail Hill Parkway is lush green thanks to the generous daily watering the development’s homeowners association. I judged places by the running paths and this was one of the best I’ve ever ran.

Near the beginning of November, our realtor finally found a buyer who made a bid on the property. It was less than we were asking and we suggested an alternative between their bid and our asking price and they accepted. It was a moment of both joy and relief mixed with a small amount of sadness. The buyer was anxious to move in and provided good-faith money and financing, while the escrow company acted swiftly to provide all the necessary paperwork to consummate the deal. Unlike a stock trade where the seller places an order and the trade transpires in a matter of seconds once the price is agreed upon, a real estate transaction involves overhead. The deed transfer from seller to buyer is a single notarized piece of paper signed by me. Beyond this one document however is at least a ream of paper if not more that must be initialed and signed.

This Saturday we received the paperwork showing the estimated closing costs which I had to initial and return. No where is the overhead involved in selling a piece of real estate more glaringly obvious than in the estimated closing statement. The first image that came to mind when I saw the estimated closing statement was a lion’s wildebeest kill on the Serengeti. It appeared to be a feeding frenzy of various predators and scavengers each taking a bite out of the carcass: 6 percent of the total sales price going to two realtors—the buyer’s and mine, the state of California taking a whopping 10 percent of our proceeds—they’re ensuring we don’t skip to New Mexico without paying them before leaving, and small bites from everyone else in the food chain in the form of fees and expenses.

In the end there was nothing for it but to accept what I could not change or affect in any way and be thankful that we profited from the transaction. I learned long ago that life isn’t fair and equitable, but rather capricious. The Victorians were of a mind that life was comprised solely of suffering and death—for the likes of the middle and lower classes that is—and if you experienced any good fortune or happiness, then you should count yourself fortunate. IM and I count ourselves fortunate.