This is the ongoing saga of our experiences building a beautiful Modern Chateau in Atherton.  Live the process vicariously with us as we do this together in real-time…

Part 1: Location, Location, Location

October 18, 2019

We’ve built houses before.  And some pretty nice ones.  This one sold for $8,700,000 off-market last year, for example.  But we’ve never attempted one like this before.

We’ve pulled inspiration from every house we see as realtors (15-25 a week, every week, for years), and all the homes we’ve helped our clients buy and sell to inform our judgement about what we are trying to build.  We have our list of things both little (electrical outlets low on the more visible side of each toilet!) and large (“wow” moments that capture the hearts of potential buyers within the first few minutes!) that we wanted to include.

And we are always in the market, scouring for a great deal on a buildable lot.  We had our thesis about what kind of house would sell in the 2-3 years it would take us to build, and an idea of the target buyer.   We had our investors lined up and ready to deploy millions urgently when the right lot appeared.

And we looked.

And we looked more.

Weeks turned into months.

During Christmas 2018-9 we thought we had something, but the deal didn’t go through.

And we looked some more.

I mean, we were busy, buying and selling for our clients, building two other projects (16,000 ft2+ of two beautiful homes in Old Palo Alto).  But we were craving for the thrill of another brand new build.

And we looked some more, harder this time.

Finally, a great place appeared.  A 70-year old rancher on Shearer Drive.  It had southern exposure to the back yard.  It was the right size (29,017 square feet of lot), and it worked for our investment thesis.

Atherton is the most expensive zip code in the country. But we didn’t want to build a full acre out to the max for well over $20 million.  There are great builders doing just that, but we saw a market gap for something a bit smaller and less costly.  I mean, don’t get us wrong, it’s still a palace we plan to build, but more for the Prince, not the King. The location of Shearer was perfect:  in prime West Atherton, but a bit away from the priciest lots right next to the Circus Club.  On a quiet street near bigger streets, but secluded enough.

We saw it on a beautiful fall Friday. It was September 6th, 2019.  We thought it was definitely kinda maybe OK.  We left.  The funny thing about great opportunities is that they don’t always show up with a neon sign announcing themselves.  We talked a bit about Shearer over the next few days, but we were busy with various proximate issues.  It took us a week to realize it. 

John was driving on tour the next week, September 12th.  Gloria was upset at John, because he sometimes takes too long viewing houses and chatting with other agents.  John said, “let’s swing by Shearer and take another look.” Gloria was thinking that we were impossibly behind schedule but agreed.  When we got there, we realized this property was looking better and better.  And as a developer, one cannot jump to quickly; people who fall in love pay more, and we were supposed to be the shrewd ones, so a hurried rush to purchase just would not do.  Yet we decided to spring into action, a week after first sight.

It had a lot of trees--well, giant weeds—and a lot of them.  We urgently got our best arborist out to evaluate what could stay and what could go.  Such things are not always so obvious to us mortals.  But Rob has a primal connection to the sylvan world, and he informed us how our weed-pocolypse could proceed.  Sometimes the most beautiful opportunity is foiled by a protected tree in the wrong place.  But we passed the tree-gate. Fantastic.  So far so good. 

We needed to know if the numbers made sense.  In a nutshell, it is Sales Price minus Land Cost and Construction Cost must leave enough of a Profit to make it worthwhile for our investors and for us.  There are a lot of soft costs and hidden costs and carrying costs, but we were pretty familiar with all of these.  What mattered really is… could we get a great general contractor to be free in our timeframe and at a reasonable cost per square foot? 

Luckily, we have worked with some of the best, we are reasonable clients (well, we think so at least), and we pay faster than *anyone* else.  I mean, same day we get the invoice sometimes.  So people like to work with us for more than our charming and witty banter on a construction site.  Which is pretty good, mind you.  We called Greg, who built our Byron project.  “Want to do a project 50% bigger than Byron, with such-and-such finishes, with this-and-that feature, for $X00 per square foot?” 

Greg is a fantastic guy who can do it all.  He is a real estate lawyer by training who liked to build.  He has a real estate license too, and probably has a medical degree.  Point is, he can do it all, and we love working with smart people like this who want to build their business.  This was a step up for both him and us.  He gave an estimate, and we ran our numbers.  It worked out.  This project looked like a go.

We had some issues to clear with Atherton Planning, like, “could we change the front of the house to the other side?”(yes, they prefer that we do in fact), and “how do the setback rules work for a corner lot with a curved section (it’s complicated), and a few other issues.  Green lights top to bottom.

We briefed our investors, who greenlit it. 

The property went on the market September 4th, 2019.  We put in an offer an 5:48pm on the 15th, which was countered by this great agent and negotiated.  As realtors, we love this part.  It is thrilling, because big money is flying around in a high stakes situation.  This was actually easier than most deals, as we are representing ourselves and our investors this time; in a typical real estate transaction there are a lot of emotions to manage, and at least we were practiced at this part. 

It was 11:07pm on Sept 15th that we formally went into contract.  We did it!  We now owned almost $5,000,000 of aging beauty who had made her contributions to the world.  The cycle of rebirth was about to commence.

Next: Part 2: How to Design a Palace