Where are buyers getting the biggest discounts?

While the number and speed of price reductions is certainly interesting information (to some), what really matters to folks out there in the market right now is the size of price reductions. Better yet, how receptive are sellers to accepting an offer below their asking price?

Let’s get down to the nitty gritty. Where are buyers currently getting the biggest discount off the asking price in Orange County? Knowing which neighborhoods are softer in terms of sale price discounts off list price will better equip you when making an offer.

In the charts below, we have taken all sales data from the last three months in Orange County and sorted it by zip code. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any zips with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel 2007 format.

Here are the top ten zip codes with the largest overall discount:

Good news if you’re in the market for some expensive oceanfront property, as the top three zip codes are all in Newport Beach. For those buyers that aren’t quite shopping in the million-dollar-plus range, there’s also some good deals to be had inland a little bit in Laguna Woods (92637), where the average sale price came in just south of $300k, and sellers accepted an average of just under 8% below asking price.

26 of the 80 zip codes we ranked came in with discounts under 2%, indicating that either buyers are more willing to pay asking price or sellers in those regions are better at pricing their homes appropriately to the market in the first place.

Several neighborhoods in OC actually had an average sale price that was higher than the final list price, with the largest difference coming in SW Santa Ana (92704). None of the top 10 zip codes that are selling for low discounts or over asking had an average list price above $400k.

In fact, looking at the overall data, there is a clear trend of homes in neighborhoods with lower average prices selling closer to asking price. Keep that in mind if you’re thinking of making a below-list offer.

Of the 5,775 sales we tracked in the 3-month period, just 83 homes (1.4%) sold for 20% or more off the asking price, and 475 homes (8.2%) sold for 10% or more off the asking price. 1,618 homes (28.0%) sold for more than asking price.

It will be interesting to keep an eye on this data once we have been able to run it for a number of months, to see which neighborhoods are trending toward larger discounts and which are trending toward selling at full price.

I think the takeaway from this data is that when crafting an offer, buyers should be aware that not all neighborhoods are created equal. While an offer 10% below list price may be accepted in a neighborhood where buyers are few and far between (usually the higher-priced neighborhoods), some areas are still seeing enough interest to command full price or even more.