Setting: the Wild Card in Country Property Values

filed under: Country Property, Horses and Wine Country, Wine Country Living posted on October 29th, 2007

Pricing residential country property is very challenging-there are so many variables to consider beyond beds and baths, square footage and age, location and condition. The size and condition of the septic system, the condition of the well and its capacity and water quality, zoning, expansion possibilities and more. (If you would have told me back at Swarthmore that I would become reasonably expert in any of these issues –especially septic–I would have doubted your sanity. Since a good 70 percent of the properties in Sonoma County are on well and septic, one of the most valuable services I can offer my clients is my ability to work with them, along with a team of experts  to carefully ensure that a property will be suitable for their needs, now and the foreseeable future. There are many great resources and people available to assist in the process, and an agent knowledgeable in country property can streamline the search and buying process for their clients, and help them to avoid pitfalls.

But the true wildcard in valuation of country property is the setting. An exceptionally private, serene setting with pastoral or dramatic views, in a tranquil location of (name your pick) wild hills and orchards, vineyards, horse farms, quaint farmhouses, redwoods or oak-studded hills, or various combinations of these, have a perceived value to the buyer that is very difficult to value.  It seems that many out of town buyers coming to a wonderful destination such as the wine country of Northern California, all want the proto-typical vintage farmhouse with wrap-around porch in a scenic setting.  They dont’t want to see or hear neighbors close by, and they’d probably like to see (or own) a vineyard or two.

 Is the setting wild card factor worth $20,000 per acre, or more? Will a property be so gorgeous or secluded that someone will “overpay” by six figures?  Is it really over-paying if a willing buyer puts the money on the table?

A client and I  viewed a property priced at $1.1 million the other day that perfectly met my buyers’ needs for a weekend home in Sonoma county. By all rights, and based upon extensive touring, the property, in my opinion and the opinion of many agents I know, should have been priced under $1m, possibly closer to $950Kor $925K, even if in perfect condition. However, it was exactly a kind of property that would be a perfect weekend retreat for someone from the city, with privacy and views on a less than 2 acre parcel that would be difficult to match. The property was in apparently poor condition with an older septic system, unknown pest issues and in a low water area.   I told my client that even though the property was extremely overpriced, someone could come in from SF or the peninsula with an out of town agent and pay the premium, since, as one friend said, you can hardly buy an outhouse in Palo Alto  or SF for a million dollars, so what is the big deal if it meets the intangible need for peace and quiet on Sunday morning.

This is every sellers’ secret fantasy:  that Brad and Angelina (or a Google couple flush with exercised stock options) will fly in on their jet and fall so in love with their property that they will throw caution to the winds and over bid.  Sadly, that almost NEVER happens, and the property sits.  I guess every once in a while the exception proves the rule, though. Back to the country retreat I mentioned above.  This summer I have seen almost everything that meets that description in Sonoma County, and sold several country properties to buyers from the Bay Area and elsewhere, some for weekend homes and some for folks who moved up full time from San Franciscio, Belmont and the East Bay.   As we were preparing to write an (perhaps insultingly low) offer on the aforementioned shangri-la, the listing agents informed me that his sellers had accepted a one million plus offer from the SF buyer and his SF agent, and they were “going to take the money and run”.    The property is still in its contingent period, and the price may be negotiated down further once all the inspections are complete, but I learned a lesson–you can never truly put a number the intangible value that a fabulous setting brings to a country property.

posted by Pam Buda // Comments Off on Setting: the Wild Card in Country Property Values