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.

The biggest question most new buyers have is whether they have to bid over the listing price (I also call it the asking price) in order to be the successful buyer. There are no hard and fast rules, but I like to show recent trends so people can see what is happening in the market right now. In my last post I showed a scatter chart with the most recent buyers all bidding over the asking price. This time I’ve got a chart of DOM (Days On the Market ) plotted against the percentage above or below the listing price for each transacation. This data covers Sonoma County Residential REO sales from June 1 to July 12, 2008.

To get oriented, find the 100 percent line along the left side. That’s where a new listing coming on the market today would show up. 100% represents full price. As you move to the right into the chart, dots above and below the 100 line represent transactions above and below the listing price. The first couple of weeks on the market is where the buying frenzy occurs as competing buyers work with their Sonoma County real estate agents to write a winning offer. You can see that there are dots both above and below the “listing price” line, so there is no magic formula for success. There are a few outlier dots where a property has been priced far from its value, but most dots cluster within 5-10 percent of the line.

To get a more accurate number for the bidding I reviewed all the homes that sold in the first 45 days they were on the market. 37 sold for over asking, 4 were at asking price, and 37 sold for less than the asking price. That’s about as balanced a market condition as you will find for freshly listed homes. Of the 37 homes that sold over the listing price, 6 closed at more than 10 % over the listing price. Except for the million dollar home you would have been the successful bidder on ANY home listed with a bid $55,101 over the listing price. There were three bidders working the other side of the over-under line. Three successful bidders came in at 10 percent less than the asking price and saved themselves about $30,000 per transaction.

As you read across the chart to the right, there is a very clear trend. Past 90 days on the market, there are zero offers over the listing price. The homes that have lingered on the market may need more work or might be in less desirable parts of the county, but it’s clear that an offer below the listing price is going to be successful. The longer it lingers, the lower the selling price will be. The chart shows that after six months, the successful bidders are at 80 percent or less of the listing price.

These charts are confusing, but they help show trends and they provide guidance for buyers who want to craft a successful strategy to buy a home in Sonoma County. Send me an email if you have any questions about these trends or would like help tracking and purchasing an REO listing in Sonoma County.

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

A close up of a random branch shows flowers packed as tightly as they will fit. The effect of massed flowers which is apparent at a distance becomes even more intense close up when each flower’s fragrance is added to the next.

The pink blossoms surround darker centers with pistils and stamens colorfully projecting an inch or more from the center.

The whole effect is magically powerful as the eye is grabbed, the nose is sweetly invaded, and the air itself seems to vibrate with the intensity of the display. It’s no wonder bees, hummingbirds, and humans all flock to these trees in this season. Absolutely irresistible.