Thursday, June 20, 2013
What's it worth?
Excerpt from chapter 5 of "Sideways in Neverland" by William Etling (2006)
"I am a real estate broker close to Mr. Jackson, in the sense that I'm in Los Olivos, and he's five miles up the road. He walked past my office once.
Neverland ranch is certainly not in our multiple listing service, and I doubt it ever will be. Properties like that don't need the mass market. There won't be any Sunday open houses.
So what's it worth? That's going to depend on who you talk to.
Take this into account: the broker who snags the listing will instantly become the highest profile Realtor in the world. You can imagine what that opportunity will do to the hyper-optimistic heart that beats in the average chest. The realistic value will double, triple, quadruple, as brokers compete for instant celebrity.
If you want to be a real estate star, the advertising budget won't break the bank. The word is out. The problem will be screening the hordes of people without a dime who want to tour the Lost Boy's lair. Expensive estates can attract sick people.
An appraiser determines value by comparing and analyzing sales on the open market. Realtors do the same, but because we are not licensed appraisers, we don't call our study an appraisal. We call it a 'comparative market analysis.'
Few homes are directly comparable. We don't just add up the sales and divide to get and average price. Square footage, quality of construction, land area, views, neighbors, neighborhood, landscaping, amenities such as pools, tennis courts, barns, outbuildings, and guest houses, easements, access, and age are just a few of the considerations that must be weighed. Road noise, terrain, driveways, soils, water quality and quantity, environmental hazards, homeowner's association issues, zoning, market trends and a host of other issues come into play.
Clearly, any opinion of value is highly subjective, easily argued up or down. Until the surprise, 'last hurrah' open house, I hadn't been on the property since I hauled hay there 30 years ago. It's changed a bit. But just for fun, let's run the numbers.
Eight thousand acres bordering Jackson's ranch sold in May of 2003 for a reported $8 million, or $1,000 per acre. It was not the caliber of Neverland. It was more remote, more rugged, with less oak forests, more steep, sage-covered hillsides. Access was from Foxen Canyon Road, not far from Fess Parker and Zaca Mesa wineries, along the gorgeous wine trail that meanders towards tiny Sisquoc and the court house in Santa Maria.
Let's be generous. If we suppose Jackson's land is worth more than what his neighbor got, say $10,000 an acre, his land alone is in the $27 million dollar range. Now we add what's built there, the buildings, roads, Ferris wheels and so on that make up the improvements. When Jackson bought in May of 1988 from Palm Springs - now Las Vegas - golf and mega-resort developer William Bone, he is said to have paid $14,6 million from the land and the improvements.
Those of you who had trouble getting that patio cover approved will be amused to hear there was a 12,522 square foot home, 2,195 square foot guest house, 2,084 square foot 'garage-office', 2,271 square foot 'recreation building' and a pool on the property, plus several older homes and barns from its days as a working cattle ranch.
Jackson put in the 165 square foot guard house, barns, animals, pens, 80 seat theatre, music stage, two trains, a train station, and numerous rides.
No buyer, not the fussiest, has ever asked me for a giraffe pen, snake barn, railway or amusement park. Appraisers call that kind of thing 'misplaced improvements'. Let's just add what the county assessor does, around $10 million. That brings our total for land and improvements to $37 million.
In addition, Jackson reportedly bought $12 million worth of personal property, such as custom furniture and African wall hangings. The fully stocked 640 square foot wine cellar held bottles valued at thousands of dollars each. Throw that into the pot, and the total is up to $49 million.
Now double, triple or quadruple that, as you strive to be the most optimistic - and most famous - listing broker in the world. Forbes magazine's 2004 list of the ten most expensive homes publicly for sale in America ranged from $38 to $75 million.
When it hits the market, Neverland will be among them. Call it a hunch."