05 HARVEST, TOO MUCH OF A GOOD THING?

Wow! It’s finally over. One of the longest harvest seasons ever with so many grapes that the tank and barrel manufacturers are as tired as the harvest workers. Barrel and stainless steel tank sales soared as an incredible volume of fruit poured in from this years North Coast harvest.

However, not all of the grapes made it to the wineries as there were entire vineyards with grapes still hanging into mid and late November when one would assume they finally gave up the ghost. If you like Port, there should be plenty to go around.

Mother Nature sends a mixed message

There were some areas that weren’t as fortunate as others. For instance the coastal areas of both Mendocino and Sonoma Counties saw a very light crop. Areas such as the Anderson Valley Appellation in Mendocino County and the Sonoma Coastal Appellation in Sonoma County saw a significant set back in the production of Pinot Noir Grapes while other Mendocino and Sonoma County Appellations saw a problem getting enough storage for their bounty.

The interior appellations of Napa, Sonoma and Mendocino Counties all experienced an increased yield compared to last year while some areas saw up to 30% increases over the 04 harvest. Most vintners are quite excited with the quality and quantity of this years crop, a rare combination indeed. It is commonly heard that more tonnage per acre tends to lead to less quality. The harvest of 2005 may cause some to rethink their position as it has been rumored this year may be one of the highest quality years for a California vintage.

This harvest was a boon to the home winemaker as there were still some grapes hanging on the vine after most wineries had filled their quotas and tanks. The savvy home winemakers were running around like kids in a candy store picking up premium high brix fruit at value prices. Before everyone starts getting concerned about the overabundance fruit let’s remember the last time this happened in 1997 the following year provided one of the lightest crops on record.

So, how did the vineyard / winery sales go this year?

As winter rains put the vines to sleep and the hard work slows down for a few months, grapes growers are paid for a years worth of hard work and it is time to reflect on our blessings of being able to live and work in this beautiful part of the world.

All in all the vineyard values have increased this year over 2004. There appears to be more high-end buyers coming to the table with disposable cash that wish to live the dream of moving to the wine country. Our Vineyard and Winery sales numbers are up this year over 2004 and it appears that things are not slowing down. The biggest problem is finding enough properties for those selective buyers.

The Tortoise and the Hare

Along with more and more sales taking place we begin to see a huge influx in the number of real estate license applicants coming in to the industry. They all have hopes and dreams of making a “Big Killing” in the business. The profession becomes flooded with amateurs, novices from every walk of life trying to make a quick buck.

There are a certain few that discredit our profession with sales tactics that are on par with the negative stereotype of a used car salesman. Needless to say, just a few spoil the image of most professionals that have worked diligently over the years to establish a good clean reputation and that strive to help people with their needs. This is not intended to discourage or disparage any new agents that are sincere about a long term real estate profession. However, getting a real estate license is the easy part. Once the new agent works through their friends and family the real challenge begins. Welcome to the business.

However, when things slow down most of the amateurs and quick buck artists leave the business like rats leaving a sinking ship. The constant influx and exit of novices in our profession in my nearly 40 years has caused our real estate purchase agreements to go from a simple one or two page agreement, to a volume of legalese, hold harmless provisions, and has caused our E & O Insurance to become prohibitive. Then once they have done the damage, they leave their rubble when the going gets tough and the remaining professionals to clean up.

The agent/broker shouldn’t just work for the commission, they must work for the client. If the agent/broker does a good job they get rewarded. There is no guarantee in this business; it’s all up to the agent/broker to prove him/herself and finding that perfect property for their clients, no matter how long it takes.

Tell them what they want to hear

Why is it that some Real Estate Agents/Brokers will tell a prospective Seller anything to get their listing? The obvious answer is to get the listing but this truly does a disservice to both the seller and agent. In the recent past of the fast moving residential market of lower to medium priced homes, it hasn’t mattered what a property is listed for as there have been several buyers waiting in line that would start a bidding war.

However, in a specialized market place of selling high-end estate properties, large estate, vineyard and/or winery properties where there are less than 1% of the buyers, it’s a different business. We see so many sellers listing their property with agents/brokers that usually are selling lower priced homes and don’t have a clue of how to market the higher-end properties. They tell the seller what the seller wants to hear, usually a higher price than the property is worth and they get the listing.

They tell of the thousands of cooperative agents that they are part of, all of which have several buyers just waiting for that listing to come on the market, and “Presto”…. the seller bites and the property is listed way over it’s real market value and it goes in the MLS Computer with hopes that some other agent out there in MLS Land will find a buyer for this over priced property. The agent and his/her company spend money promoting this property. The seller sees little or no action and everyone is upset. The agents that show the over priced property are usually using it to help sell a better priced property of the same type.

The Tortoise and the Hare approach

In some cases our firm will work with sellers for up to 5 years before they decide to sell their property. Most of the larger estate, vineyard or winery properties have been in the family for decades and it is important to move at the pace that that the sellers wish to move in this very difficult and life changing decision. We find that we will list 2 out of 5 properties that we work on for listings and we sell them ourselves if they are realistically priced.

The other 3 properties will go to agents or brokers that have told the sellers something that they wanted to hear, usually a much higher price than we have suggested. The price gets dropped a few months later after becoming an “Old Listing” and has been used by other agents to sell more realistically priced properties.

Eventually the listing will expire, and someone else will have to pick up the pieces and re-educate the sellers. We have found that in most cases, we will get the call and the “Tortoise” will have prevailed in this race. In a few cases it is difficult to get market value after the property has been on the market for such a long time because potential buyers and agents are wondering if there is something wrong with the property since it has been on the market for so long.

Since our firm specializes in only vineyard, vineyard estate, high-end estate properties, and wineries in Napa, Sonoma, and Mendocino Counties, we are not in the business of selling medium priced range homes or tract situations. We will not go into that market place, and I have hard time wondering why a novice agent or broker will wonder into our niche market without the knowledge of what to do with this type of real estate.

We have found that we will end up selling at least the third and perhaps the forth property when it is all said and done. So our 2 out of 5 potential listings usually end up being 3 to 4 sales in the end for us, most of which we list and sell ourselves. In 2003 and 2004 we sold 56% of all lager Vineyard Estate properties in Napa and Sonoma Counties and had dealings with 40% of the winery sales that took place on those years in both counties. (As shown in an article written by North-Bay Business October Harvest Issue). 2005 has been equally or more active for our firm.

Our “Tortoise and Hare Approach” usually works with the sellers that eventually figure out the real market value of their property (more often than not, what we told them in the first place.) In most cases we will see them again wanting to get reacquainted. It’s not the fastest talker, the pounds of brochures, or hundreds of agents that wins this game. It’s the professional experienced agent/broker with the most knowledge of that “Niche Market” that will end up selling your property.

Having been in the real estate business for nearly 40 years our firm has seen a lot of changes, some for the better and some for the worst. Our industry would be much better served if it were one that were known for it’s professionalism and integrity rather than the get rich quick influx of new agents in a hot market, something we are seeing more and more lately.

Let us know if Bergman Euro-National can be of service to you.