View of Healdsburg and Fitch Mountain

This is an unusually good time to be shopping for land and ranches in Dry Creek Valley and other areas around Healdsburg.  Most times in the past three decades you would only have one or two pieces to choose from, and most of those would be the picked over properties that were lacking water, perc, or charm…or all three.  Today’s selections include some rugged hillside property suited for a secluded getaway, but they also include plantable vineyard land, vineyards, estate homes, and wonderful view acreage overlooking Healdsburg.

Will Rogers’ comment about “…not making any more land.” referred to coastal property, but Healdsburg’s Dry Creek Valley wine country comes close to coastal land in terms of desirability, uniqueness, and limited supply. If you have given any thought to a home in the wine country, this may be the best opportunity in a long time.

Missing Transition Between Wood and Tile

Badly done home remodels aren’t the fault of Home Depot. Too many homeowners watching “Flip this House” or “Trading Places” got themselves focused on the wrong aspects of home repair. The fundamentals of construction techniques that have evolved over centuries were ignored in favor of flashy fixtures and false ideas about quality and materials. Well meaning, but inexperienced, weekend builders invested thousands of dollars in projects that currently drag down the value of the houses they once owned.
Floors shout this most clearly. More than half the REO (bank owned) homes I visit have sloppy, owner-installed floor projects. The problems include missing thresholds (most common), poor wall junctures, improper underlayment, inappropriate material choices, and incorrect installation. It’s clear that the owners wanted improvements, but they ended up with results that are a net negative for the home’s value. The best lesson I can draw from this is that you should start with projects you know you can finish…properly.

Sonoma County has plenty of good sources of materials for do it yourselfers.

• Friedman Brothers
• Lowes
• Home Depot
• Healdsburg Lumber
• Ace Hardware
• Berry’s Mill in Cazadero
• and many more

Please leave your favorite stores in comments

Sonoma County Barn

People chase their dreams to Sonoma County. For some it’s an adventurous leap to a new lifestyle in the wine business. For others it’s the coast and redwoods with their timeless beauty and larger than life rhythms. For still others it’s the fertile soils and the summoning call of dawn’s rooster, jealous memories of harvest celebrations as an outsider, and the yearning for calluses and soul-filling work poured into every crop. Flocks of dreamers heading to Sonoma County from every direction. You may be one of them.

5 to 500 acres starting at $500,000

It’s not quite true that everyone wants the same things, but every real estate agent in Napa and Sonoma can tell you about the couple looking for five to ten acres with a little farmhouse and some room for grapes. We’d have sold the wine country out of land ten times over if we had enough of those dream properties that people want. The fact that classic farmhouses with palm trees and redwoods sharing a front yard even exist in this world is amazing in itself. To actually see one on the market from time to time is even more remarkable. For the most part we deal with more prosaic properties, each with idiosyncratic tendencies and charming flaws. Charming, but disclosed in any case.

During the peak of the real estate bubble, land of any kind or size was hard to find.  The easing of the bubble and the slower economy we are now enduring have combined to create one of the best land portfolios we have ever had to offer.  We have vineyards, forests, farms, shacks, Victorians, and maybe even a mansion or two. If you are one of my precious flock of land enthusiasts, let’s start exploring your options.

My lovely and talented wife hates it when I start raving about maps. “It’s unseemly”, she says, and besides, “hardly anybody loves maps like you do.”

So, here’s the compromise. I won’t rave about this map. Just go check it out.

Sonoma REO Map Search Screen Shot

I will say, not ranting or raving mind you, that looking for property on a map is much more useful than going over a printed lists. For one thing, you can start near where you or a friend lives and start scanning the neighborhoods you know. With a list, you just might miss a street or tiny cul de sac you aren’t familiar with.  I love spreadsheets for doing investment analysis or running a database too, but there’s nothing as satisfying as cruising around a map online to see what real estate bargains are waiting for you.

You don’t have to register to search. My philosophy is to empower my potential clients with as much information as they want. The more you know about the real estate market in Sonoma County, the easier it is for me to help you make a successful offer on the Sonoma County property you wnat to buy.

I am curious about who uses my search tools, so feel free to call me at 707-869-1884 or email me at dave@sonoma.net and we can talk about making your searching more effective or looking at a listing. I’m here to serve you and if I make a buck or two on a commission, it’s a buck or two out of the seller’s pocket, not yours.

How does three Sonoma County REO sales per day since January 1 sound? How about five per day since May 1?

I last wrote about Sonoma County REO properties in January of this year. At that point fewer than 60 REO properties had been sold in the prior six months, or an average of one every three days. Fast forward to today and we have averaged almost 100 Sonoma County REO sales per month. It’s even more heated than those numbers show, since the pace of sales has picked up to more than 5 per day in May and June. Real estate investors and renters with enough cash for a big down payment are jumping on the bandwagon and pushing hard to get into entry level homes.

Everyone wants to know what’s going on with this hot market. I hear stories of overbidding and multiple offers, but it’s usually “something I heard” or “it happened to my friend”. I figured we could all use a dose of Sonoma County REO Reality, so I pulled up the actual results of REO sales since January 1. The first thing to think about is volume. As of June 8, 460 Sonoma County REO homes have been purchased for a total of $160,000,000. That’s a lot of money. Right around $1,000,000 per day average. For May and June, two million bucks a day chasing the REO market in Sonoma County is a good estimate. We all are looking for great bargains for ourselves or our real estate clients, but there is serious money chasing these properties.

Okay, let’s get you some practical information you can use. There’s a lot of money sloshing around. How much of it is being spent above the listing price? There are a lot pieces to this overbid parcel, so let me start with general statements.

75% of the Sonoma County REO homes purchased this year have been bought for the listing price or less.

Out of the 460 homes sold so far, 346 were at or below list and 114 sold for over listing price. The range of overbids has been from a low of $50 over (lucky buyer) to the maximum overbid of $67,400 on May 2. The final selling price on that one was 21% above the listing price. Historically, only nine of the 460 properties have gone for more than 10% above asking, so that gives you some idea of your odds when you are writing an offer. During the course of this year, you had a 98% chance of being the winning bidder if you wrote an offer up to 10% over the asking price.

That was then; this is now

What do I mean by that. Well, we’ve been talking averages for the whole year and that’s not how this business works. What was successful in January (when you should have bought) is now ancient history. There were three overbids in January, and three people paid the listing price. The other 19 buyers got discounts that averaged $31,000. By contrast, today’s market is HOT!

I pulled the number for properties that closed in June and more than half of them, 24 out of 46, sold for over the asking price. In June, the highest overbid so far has only been 11%, but in pure dollar terms, more than 10% of the winning buyers have paid more than $20,000 over the listing price. Some of those were on properties that had already been marked down, but many were at their original listing price. The lowest successful overbids were three people who got lucky with $100 over asking. Those three Sonoma County REO listings had already taken a markdown from their original listing price. There were five buyers between $100 and $9,999 over listing price who got their homes. At the top of the heap were the ten buyers (out of 46) who paid $10,000 to $26,500 for the privilege of buying a home above listing price. Please remember, 22 people paid less than listing price to get their homes during this same time frame.

Putting all the buyers into three rough groups, you have half the successful buyers who didn’t overbid, a quarter of the winning buyers bid over, but less than $10,000, and the big spending quarter of the buyers who spent serious money to get the house they wanted.

The purpose of a post like this is a combination of advice and history. If you don’t know what other buyers are doing, you can’t form a rational approach to acquiring an REO property. This post is intentionally general to be useful as an overall guideline. When you have identified the neighborhoods and budgets that you want to work with you can do an analysis like this with your agent to see what strategies for bid price might be effective for you.

I can set up a free automated REO search for you if you aren’t already working with a real estate agent. Just send me an email with your name, phone number, email address, price range, and city where you want to find an REO home. Your custom search will notify you whenever properties come on the market or have price or status changes.

We have just listed two estate site properties near the north end of the valley close to Asti. The two separate, but contiguous parcels would be great for small vineyards or horses.

The land is rolling hills with the front of the bigger property beginning right on River Road near the summer crossing of the Russian River at Asti. The land rises gradually through terrain of trees and meadows. There is a knoll crossed by the invisible line that divided two land grant Ranchos.

That knoll is where the natural home sites area and where the two properties are separated. The smaller property dips down the back of the knoll and then climbs again to a high point at the back of the property. I took a screen shot with Google Earth to show the approximate property lines superimposed on the land.

This would be a wonderful estate site for someone who wants to build a family compound. There are two separate parcels, each of which could have an additional guest unit.

Man, it was beautiful.

Part of it was the light, but the magic was part green, part quiet, part animal, and a big dollop of pace. I was lucky that I left an hour early for my appointment. I had hoped to get some pictures on the drive, but the final results were much better than I had hoped for. It wasn’t just that I got some fun pictures, but that my mood got a chance to get mellow by sharing some space and time with a very special place.

The critters that get to hang out all day munching luscious Sonoma County grass may not notice that they live in a great area, but I think the California Cheese commercials on TV actually capture something when they talk about California cows. I haven’t seen any TV for sheep, but they seem to be in on the action as well.

The one bee buzzing around the picnic was an issue that I hadn’t been aware of until my drive today. There are efforts to open a quarry on Roblar Road. I don’t know enough to take sides on this, but I feel strongly that a neighborhood as peaceful and rural as Roblar Road deserves a chance to opt out of the path of progress if they choose to. You can read more details of the issues in this Sonoma West Times and News article

First, the number of REO properties is small in absolute terms, but as of the end of the year, nearly 400 homes in Sonoma County fell into that category. Less than half of that number were actively on the market, so there is a growing reserve of over hundreds of REO homes that aren’t listed on the MLS yet. The sellers are motivated to get these properties off the books, but they don’t want to flood the market and depress prices any further. Still, the need to dispose of the homes will be a strong incentive for the REO holders to accept qualified offers and to avoid piling up even more inventory as the foreclosure boom continues.

Some properties are on the market now that I would classify as excellent values. Some are inexpensive enough to create a positive cash flow for investors; others are estate type properties at prices that will look like great deals in a few years. I can produce a list of the MLS-listed, REO single family homes available for download if you would like to see what’s on the market. I would also be happy to produce a list about REO properties in specific areas.

In the last six months 60 REO single family homeshave been sold. Selling prices ranged from $195,000 to over $1,000,000. Depending on location, the prices they are selling for are anywhere from 15% to 30% below the market peak prices of 2005. Almost nowhere in the county is immune from foreclosures, so these sales happened in south west Santa Rosa and the Russian River, but also in Healdsburg, Sonoma, Sebastopol, and Fountaingrove.

The other factor to consider along with REO’s in Sonoma County is short sales. These are sales for less than is owed on the property and the banks and other mortgage holders end up negotiating how much money they are willing to lose. Their alternative, of course, is to foreclose on the property and take their chances that either wiping out a second mortgage or a HELOC (Home Equity Line of Credit) might leave them in a position to recover their investment. There are more than 500 short sale listings right now, and it’s fair to say that all of them are highly motivated sellers. Add to this the even more motivated sellers of the 41 homes listed on the MLS that are in foreclosure or have a notice of default filed, and it makes this is an interesting time to be a buyer.