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$1M dollar view for $299K

Foreclosures forcing below current market prices

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$1M dollar view for $299K

Cheryl McFall of Re/Max Executive in front of the pond that's part of the 10.71 acres that includes a modular home.

DENNIS WYATT/The Bulletin


POSTED March 24, 2010 2:49 a.m.
It is a million dollar view with a $299,000 price tag.

An unobstructed view of the Coastal Ranges looms to the west, the well-kept vineyards of McManis Family Vineyards are to the north and west while the tree-line of the Stanislaus River is visible to the south.

That view also comes with 10.71 acres featuring fertile sandy loam soil along with a large pond and a 1,248-square-foor modular home built in 2002. The property is at 30601 Two Rivers Road about eight miles south of Manteca near where the Stanislaus and San Joaquin rivers join forces.

Even 20 years ago you couldn’t find property like that for less than $300,000. And it’s not exactly going begging, either. There have been dozens of interested buyers. But due to one of the quirks of the current housing mess, appraisers are jittery about putting a price on the modular home as there are simply not comparables nearby in the past six months they can do a comparison price to satisfy ever tightening FHA requirements. That means the only buyers who can get loans if they don’t have all cash are those that can go conventional which means 20 percent down or $29,900 upfront.

“There just isn’t any country property out there,” noted Re/Max Executive agent Cheryl McFall.

The owners - who want to move - have equity even at $299,000. McFall could also rattle off a list of interested buyers but everyone is being tripped up by the fact the home won’t go FHA that accounts for close to 90 percent of all loans in the Manteca housing market for existing homes  

The seller has no other choice but to push the price below market if they want to sell. It is another way that the foreclosure frenzy is forcing sellers to become aggressive to the point that it may seem they are undermining their own position. They have the equity, though, to make such a move in terms of their price.

Meanwhile, McFall is looking for the right buyer - someone who can secure a conventional loan or a savvy investor.

The property pricing - pushed downward by the quirks of the foreclosure market - has dropped below what the land is worth.

McFall and other Realtors are expecting a “reverse rubber band effect” in the coming years. Property - for a variety of reasons - are selling below either what it would cost to build a home or, in the case of McFall’s listing, below the market value of the land. It has everything to do with the unraveling the mortgage mess as banks scramble to deal with short sales, foreclosures, and are still trying to get a good feel for markets such as Manteca that may seem foreign to them especially if they are located thousands of miles away.

Realtor Tom Wilson noted that most existing homes selling in Manteca are going for “under the value of today’s market.”

That means in a relatively short time down the road - anywhere from two to five years - such properties could very well experience a rapid gain - and then level out or increase in value much slower. It is based on the fact that if you tried to replace those homes by rebuilding it from scratch plus pay growth fees as well as the price of the land, the price would be higher than what they are now selling for in today’s market. In many cases, it is as much as $20,000 per home.

Many Realtors such as Wilson believe it is because out-of-town agents working with banks that also have no local presence in the area often lump Manteca and Ripon into the same market as Stockton or Modesto instead of recognizing for a sub-market with higher values. As a result, they are setting prices that a growing number of experts in the real estate field believe are a bit too low for true market conditions.

While it’s created bargains in town, it has created deals of the century when it comes to country property around Manteca. Other examples include a large custom home with grandiose accents, elaborate gardens, corrals with irrigate pasture, a second home and 20 acres closing escrow at the end of last year for under $500,000. The original owner had turned down an offer of $1.1 million just over four years ago as being too low. Ultimately the home went into foreclosure.

A standard stick-and-mortar single family custom home north of Manteca on 1.45 acres sold for $745,000 in early 2004. Last year, it closed escrow for $295,000

McFall can be reached at 239-7653.

Additional photos and story on the Two Rivers Road property and home we appear in Friday’s Home Scene section in the Manteca Bulletin.
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