Nov. 14, 2007 -- California residents just might see the following real estate listing very soon …
Foreclosure Sale: Priced to Sell! Stunning 2,500-plus acre ranch surrounded by gorgeous vineyards in the lush rolling hills of Los Olivos, Calif. Property features a magnificent mansion as well as unique improvements including bumper cars and a primate center.
Of course, this estate also comes with loads of baggage, as it was once the primary residence of the King of Pop.
Michael Jackson is at risk of losing his Neverland Ranch if he does not pay at least $212,963 on his delinquent $23,212,963 loan. Jackson took out a $23 million loan in 2006 amid mounting debts.
The Mortgage Lender Implode-O-Meter, a foreclosure tracking Web site, discovered the property listed on a Notice of Default report for Santa Barbara County. Michael J. Jackson of Washington, D.C. is listed as the owner.
The singer took up residence at 5225 Figueroa Mountain Rd. in 1988 along with Bubbles the monkey and an assortment of llamas. He built a private amusement park and named the property Neverland Ranch, after the fictional home of the eternally boyish Peter Pan.
Jackson hasn't lived at the ranch for several years. After he was acquitted of all charges in his 2005 child molestation trial, Jackson left, saying "I won't live there again. It's a house now. It's not a home anymore."
Estate Workers Were Laid Off
In March 2006, after finally paying ranch employees hundreds of thousands of dollars in back wages, Jackson closed up the main house and laid off workers on the estate. A small number of animal caretakers were retained. Jackson reportedly now maintains homes in Bahrain and Washington.
With the news that Neverland Ranch may wind up in foreclosure, there's been no lack of speculation about what the future holds for the prestigious, yet tainted parcel of land in California's posh Santa Barbara County.
With the country in the midst of a mortgage crisis, foreclosures are growing nationwide. The numbers are harrowing: According to the Center for Responsible Lending, one in five subprime mortgages made between 2005 and 2006 are expected to end in foreclosure. Big Wall Street banks like Morgan Stanley, Citigroup Inc. and Merrill Lynch have suffered huge losses in bad mortgage investments. Just last week U.S. Federal Reserve chairman Ben Bernanke stated that as many as 2.3 million subprime mortgages will reset at higher rates in the next year, indicating the flood of foreclosures may continue for months to come.
With home values depreciating under the strain of the downturn, many wonder whether Neverland Ranch will be able to retain its value. Could this epic property sell for pennies on the dollar in a foreclosure auction?
"No, quite the opposite, there's too much value with a property like this," said Harry Kolb of Sotheby's International Realty in Santa Barbara. "The lesser price houses in foreclosure don't have the value, the property size, the location and the uniqueness of the architecture of Neverland Ranch. This property is going to have significant value."
Kolb says that the property will appeal to somebody with very deep pockets and that while the association with Jackson may diminish the value of the property a little, ultimately, it is a superb parcel of land.
The bucolic hills of the Santa Ynez Valley have long attracted the rich and famous, President Reagan, Bo Derek and Matt Leblanc among them. It was the setting for the hit film "Sideways."
William Etling, a California-based real estate agent and author of "Sideways in Neverland: Life in the Santa Ynez Valley," says that Neverland has long been one of the most beautiful ranches of Santa Barbara County, where, he says, home values remain strong. Etling estimates that a two-bedroom home on an acre of land near Neverland could easily sell for a million dollars.
Previous Offers Were Made
"Anyone would be proud to own Neverland Ranch. It's a gorgeous piece of property," said Etling.
"There have been several offers to buy it from him in years past, but my understanding is that Jackson was choosing not to sell at that time," said Kolb. No details about those offers were available.
It appears Jackson may no longer have a choice. According to the Notice of Default and Election to Sell filed by Alliance Default Services of San Francisco, Jackson must make immediate payment on the defaulted loan within three months of the Oct. 22 filing date or he will lose Neverland Ranch. Alliance Default Services did not return calls.
If Jackson does not bring the payments up to date, Alliance Default Services could have the property auctioned in a Santa Barbara courthouse. Experts say the company is more likely to retain a real estate agency to show the property privately, ensuring the highest selling price possible.
So what would that selling price be? It's difficult to gauge. The only people who have seen it up close recently are a small group of caretakers.
"As far as I know, no real estate agents or appraisers have seen that property in quite some time," said Suzanne Perkins of Sotheby's International Realty in Santa Barbara. "If it's pristine, well maintained and in excellent condition, it could go for upwards of $30 million. If it's in disrepair and the ranch has been neglected it could be lower."
Etling claims to have seen the property in 2004 and says it was in magnificent condition at that time, adding it was "maintained like English royalty." He thinks it could go for anywhere between $35 million and $100 million.
"A single, bare-acre lot in Santa Ynez Valley goes for $600,000. Even if you estimate an extremely discounted cost of $10,000 an acre, Neverland would still sell for about $26 million, and that's not including the home, structures and improvements, which the county estimates to be worth $10 million," said Etling. "So if you calculate the land is worth over $30,000 an acre, who knows? The total price could be as high as $90 million."
Ripe for Development?
If such a large lot of prime Santa Barbara County land became available, development might seem inevitable. Some speculate that there must be a builder waiting in the wings, salivating at the thought of leveling the home and amusement park and dividing Neverland into smaller parcels with individual estates and hefty price tags.
"It is going to have a certain appeal for somebody to divide it into smaller ranches, 2,500 acres is more than most people need," said Kolb, "but just because it's subdivided doesn't make the parts more valuable than the whole."
Perkins agreed. "It's a large ranch and people in the county want to see large ranches preserved. And there are plenty of people out there that are looking for large properties who are willing to spend money for the privacy 2,500 acres affords."
It's unclear what would become of the Ferris wheel, bumper cars, petting zoo and other amenities Jackson built over the years. A buyer who wants a permit for new construction on the property may first have to bring all existing structures into compliance with the Williamson Act, a contract that protects farmers by ensuring that land will be used for agricultural pursuits only. That means any illegal structures on Neverland Ranch would have to be removed.
"A significant number of those amusement park structures were built without permits," said Perkins.
And what about fans who might want to pose as potential buyers to get a peek at the Gloved One's longtime sanctuary?
"Whoever gets the listing, they'll pick a knowledgeable agent who will weed out inappropriate buyers," says Perkins. "Most high-end realty companies would not even show properties of that value without getting financial verification from the buyer at the very beginning."
Neverland Ranch may rank as the most notorious piece of property ever owned by a celebrity. Whatever the future holds, it may be impossible to shake the association with the King of Pop.
"You couldn't possibly deny who the previous owner was," said Kolb. "There is no reason to do that. The property is too famous."