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John Souerbry's Blog

By John Souerbry | Broker in Palo Alto, CA
  • Tips For Buying Residential Lots

    Posted Under: Home Buying in California, Home Selling in California, Investment Properties in California  |  June 10, 2014 9:55 AM  |  593 views  |  2 comments

    Buying Residential LotsIn today’s market, many home buyers are buying residential lots instead and building custom homes.  Improved market conditions in many areas are also allowing investors to return to the business of buying land and building custom “spec” homes or small subdivisions.  If you’re thinking about buying unimproved residential land and building – whether for a home or investment – here are a few tips for finding the right property and closing the sale.

    1. Site Selection Criteria

    Buying an existing home or buying land starts with similar criteria – the right location, total cost and ability to use the property as we want.  Here are common selection criteria for buying residential lots.

    1. Location: schools, business center(s) commute, shopping/services, public facilities/services/transportation, public safety (police, fire, medical), Walk Score® (1), crime rate, noise, traffic
    2. Neighborhood value: median prices for comparable properties, escalation forecast
    3. Lot characteristics: Size, topography, view, drainage, exposure, surface features (water, rocks, trees, foliage), soil and sub-surface conditions
    4. Improvement entitlements and restrictions: Zoning, boundaries, easements, encroachments, limits (set-backs, footprint, height, total square footage, type and number of structures), architectural mandates, homeowner association requirements
    5. Utilities and services:  Availability of gas, water, electric, sewer, trash collection and communications.
    6. Ownership, Improvement and Occupancy:  Clear title, total acquisition costs, total construction costs, permit costs and schedules, estimated recurring ownership costs

    (1) Walk Score® is a property rating based upon availability of goods and services within walking distance.  Some property search systems provide a Walk Score® automatically with their listings, click on Northern California Property Search (my site) and look up any property.  You’ll see a Walk Score® tab.  A high score means goods and services are close, a low score means the property is “car-dependent.”  A high or low Walk Score® is usually immaterial to the value of rural properties, but a high score adds value to urban properties.

    2. Property Search

    There are many tools available to conduct a thorough property search.  We can work with a broker to scour the local multiple listing service (MLS), search online, read the real estate section of print publications, and drive neighborhoods looking for For Sale signs on properties that are not otherwise advertised.  We might look at properties that are not for sale and ask the owner if they’ll consider an unsolicited offer.   We can also inform our circle of friends and business acquaintances that we are in the market for residential lots.

    We should also consider tear-down properties in our search.  These are homes in great locations that have outlived their “economic life” and would be costly to repair or rehabilitate.  Sometimes removing the existing structure and replacing it with a modern home that makes best use of the land can be very cost-effective.

    Helpful articles from my blog on where to look for properties and how to make unsolicited offers:

    Where Does Real Estate For Sale Come From?”

     “Making An Unsolicited Offer for An Unlisted Home”

    3. Analysis and Inspection

    Site selection criteria can be used to both screen lot listings and then to confirm that we want to go through with the purchase.  Some analysis and inspection should be done prior to making an offer, some we’ll do during escrow with closing contingent upon favorable results of the inspections.  The chart below identifies typical lot evaluation criteria and suggests when they might be evaluated (list and schedule should be tailored to specific opportunities).

     

    Residential Lot Analysis Checklist

     

    4. Structuring The Purchase Contract

    California Real Estate ContractStrategies used to buy a residential lot are similar to those included in a home purchase offer.  The offering price, length of escrow and general closing conditions should take into consideration the seller’s requirements, competition from other buyers, and resources available to buy and improve the land for its intended use.  When the situation provides flexibility to do so, we can look at structuring a winning purchase offer with features that are usually specific to lot contracts.

    Buying With Entitlements.  Most large-scale developers buy only “entitled land.”  This means they must receive written approval of their planned use for the property from the applicable government authority (usually city or county) before escrow closes.  For single family home lot purchases, required entitlements could be a lot survey, approved architectural plans, construction permits, soils analysis or perc test rating – whatever applies to the property and is feasible given the buyer’s plans and resources.  Sometimes sellers will obtain basic entitlements prior to placing their land on the market and roll the cost of obtaining them into the sale price (usually with a slight mark-up).  More entitlements in place at close of escrow means less risk for the buyer.

    Purchasing An Option. If the seller is not in a hurry to close the sale and the buyer needs time to raise development money, secure entitlements or schedule construction, a buyer might offer to purchase an option.  An option is simply the right to purchase the land in the future.  The buyer will normally have access to the land during the option period to conduct pre-approved testing and inspections.

    Installment or “Land” Contract.  This type of purchase agreement can be useful if the seller has the flexibility and willingness to accept installment payments.  There are two major considerations with this type of contract: 1) transfer of ownership doesn’t occur until the final payment has been made and 2) sellers usually won’t allow the buyer to begin improving the land until after transfer of ownership.

    Joint Venture.  Although I seldom recommend a joint venture (JV), they can be useful for “spec” home or subdivision development when both parties understand the risks.  In a typical JV, the land owner provides the land and the developer provides the resources to makes the improvements.  The finished property is then sold and the JV partners split the net proceeds per their agreement.  The primary risk is that if the JV is unable to complete improvements and folds, the land owner is stuck with a parcel of land with a partially-built structure on it that diminishes the land’s market value.

     

    I hope you found these tips for buying residential lots helpful.  As with all my purchase tips, sellers should also consider how they can use the strategies and options discussed.  If you have a question about buying land or need assistance with your next purchase or sale, drop me a line.  Contact Us

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    John A. Souerbry & Associates  (CalBRE 01370983)

  • Yountville May 2014 Home Sales Report

    Posted Under: Market Conditions in Yountville, Home Buying in Yountville, Home Selling in Yountville  |  June 4, 2014 7:33 AM  |  618 views  |  No comments

    The Yountville May 2014 home sales report reflects the small, but strong, market for homes in this central Napa Valley village known for fine restaurants, luxurious spas and close proximity to some of the finest wineries in the Valley.  Three properties closed escrow in May, all had been on the market just 2 to 4 weeks before selling.

    There are currently six homes for sale, including one condo.  All homes have been on the market less than two months.

    June 1st Yountville Real Estate Market Snapshot:

    • Homes active for sale: 6 (click to view > Yountville homes for sale)
    • Distressed properties for sale:  Short Sale – 0  Foreclosures – 0
    • Price range of active listings:  $674,000 to $6,495,000
    • Number of homes now in escrow:  3

     

    Yountville May 2014 Home Sales Report – Closed Escrows

    Yountville May 2014 Home Sales Report

     

    To search for homes, land and property of all types in Yountville and surrounding Wine Country – click > Wine Country Property Search.

    Contact Us for more information regarding this Yountville May 2014 home sales report or for help buying or selling Wine Country real estate.

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    John A. Souerbry & Associates  Call John: (707) 317-0280 (CalBRE 01370983)

  • Napa May 2014 Home Sales Report

    Posted Under: Market Conditions in Napa, Home Buying in Napa, Home Selling in Napa  |  June 4, 2014 7:07 AM  |  630 views  |  No comments

    The Napa May 2014 home sales report reflects an improved market throughout most of Wine Country, with additional inventory coming on the market every week.  Eighty six homes closed escrow in May, including a welcome 12 homes that sold for greater than $1M.  The $2M to $5M price range has lagged in sales the past couple of years, two homes above $2M are included in May’s sales.

    There are 218 homes on the market, down from 230 last month.  The number of short sale listings has increased from 1 to 5 and there are still 5 foreclosure listings.

    June 1st Napa Market Snapshot:

    • Homes active on the market: 218 (click to view > Napa homes for sale)
    • Distressed properties for sale:  Short Sale – 5  Foreclosures – 5
    • Price range of active listings:  $249,000 to $13,950,000
    • Number of homes now in escrow:  156

     

    Napa May 2014 Home Sales Report – Closed Escrows

    Napa April 2014 Home Sales Report

     

    Contact Us for more information regarding this Napa May 2014 home sales report or for help buying or selling Wine Country real estate.

    To search online for homes, land and property of all types in Napa and Wine Country – click > Wine Country Property Search.

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    John A. Souerbry & Associates  Call John: (707) 317-0280 (CalBRE 01370983)

  • American Canyon May 2014 Home Sales Report

    Posted Under: Market Conditions in American Canyon, Home Buying in American Canyon, Home Selling in American Canyon  |  June 4, 2014 6:32 AM  |  641 views  |  No comments

    The American Canyon May 2014 home sales report reflects a steady southern Napa County real estate market, where prices are generally flat and homes are taking a month and a half on average to sell.  Sixteen homes closed escrow in May.

    There are currently 11 homes for sale, including one short sale and one foreclosed property.  Three of the 11 came on the market in just the past week and 10 of the 11 have been on the market less than 30 days.

    June 1st American Canyon Real Estate Market Snapshot:

    • Homes active for sale: 11 (click to view > American Canyon homes for sale)
    • Distressed properties for sale:  Short Sale – 1  Foreclosed – 1
    • Price range of active listings: $310,000 to $1,495,000
    • Number of homes now in escrow:  28

     

    American Canyon May 2014 Home Sales Report – Closed Sales

     American Canyon May 2014 Home Sales Report

     

    To search for homes, land and property of all types in American Canyon and the North Bay – click > Wine Country Property Search.

    Contact Us for more information regarding this American Canyon May 2014 home sales report or for help buying or selling Wine Country real estate.

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    John A. Souerbry & Associates  Call John: (707) 317-0280 (CalBRE 01370983)

  • Benicia May 2014 Home Sales Report

    Posted Under: Market Conditions in Benicia, Home Buying in Benicia, Home Selling in Benicia  |  June 4, 2014 5:58 AM  |  646 views  |  No comments

    The Benicia May 2014 home sales report for this south Solano County community reflects brisk sales and steady prices.  Thirty two homes closed escrow in May, including 10 condos.  Sales reflected an even mix of properties that have been on the market for several months and new offerings (13 closed homes had been on the market less than 30 days).

    There are 38 homes on the market at the start of June, 25 of which came on the market within the past 30 days.  Only four homes have been on the market more than 90 days.

     

    June 1st Benicia Market Snapshot:

    • Homes active on the market: 38 (click to view > Benicia Homes)
    • Distressed properties for sale:  Short Sale – 1  Foreclosed – 0
    • Price range of active listings: $195,000 to $880,000
    • Number of homes now in escrow:  43

    Benicia May 2014 Home Sales Report – Closed Sales

    Benicia May 2014 Home Sales Report

     

    To search online for homes, land and properties of all types throughout North Bay and Wine Country, click here:  Wine Country Property Search.

    Contact Us for more information regarding this Benicia May 2014 home sales report or for help buying or selling Wine Country real estate.

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    John A. Souerbry & Associates  Call John: (707) 317-0280  (CalBRE 01370983)

  • Cordelia May 2014 Home Sales Report

    Posted Under: Market Conditions in Fairfield, Home Buying in Fairfield, Home Selling in Fairfield  |  June 4, 2014 5:11 AM  |  634 views  |  No comments

    The Cordelia May 2014 home sales report for this Fairfield, CA community reflects limited inventory that is priced a little high for the area.  Eight homes closed escrow in May, including four new construction.  Demand is softer than in the last couple of years due to higher asking prices, resulting in an average time on market of about 25 days.

    Twenty two homes are currently for sale.

     

    June 1st Cordelia Home Sales Market Snapshot:

    • Homes active on the market: 22 (click to view > Cordelia Homes)
    • Distressed properties for sale:  Short Sale – 2  Foreclosed – 0
    • Price range of active listings: $299,950 to $555,000
    • Homes in escrow:  17

     

    Cordelia May 2014 Home Sales Report – Closed Escrows

    Cordelia May 2014 Home Sales Report

     

    To search online for homes, land and all types of properties throughout Solano, Napa, Sonoma and Marin Counties, click here:  Wine Country Property Search.

    Contact Us for more information regarding this Cordelia May 2014 home sales report or for help buying or selling Wine Country real estate.

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    John A. Souerbry & Associates  Call John: (707) 317-0280  (CalBRE 01370983)

  • Green Valley May 2014 Home Sales Report

    Posted Under: Market Conditions in Fairfield, Home Buying in Fairfield, Home Selling in Fairfield  |  June 3, 2014 6:39 PM  |  559 views  |  No comments

    The Green Valley May 2014 home sales report for this western Fairfield, CA community reflects a stable market for homes in the area.  Nineteen homes closed escrow in May, ranging in price from $250,000 to $1,000,000.

    There are currently 30 homes on the market, with a median price around $740,000 and ten homes priced over $1M.

    June 1st Green Valley Market Snapshot:

    • Homes active on the market: 30 (click to view > Green Valley Homes)
    • Distressed homes for sale:  Short Sale – 1 Foreclosed – 0
    • Price range of active listings: $340,000 to $18,000,000
    • Homes in escrow:  29

     

    Green Valley May 2014 Home Report – Closed Sales

    Green Valley May 2014 Home Sales Report

     

    To search online for homes, land and all types of properties throughout the area, click here:Wine Country Home Search.

    Contact Us for more information regarding this Green Valley May 2014 home sales report or for help buying or selling Wine Country real estate.

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    John A. Souerbry & Associates  Call John: (707) 317-0280  (CalBRE 01370983)

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