CITYWIDE — Santa Monicans are being targeted by real estate agents representing developers looking to turn small homes in desirable neighborhoods into mini-mansions that can be sold for double the original asking price.
The agents tend to single out older homes, often taking up a relatively small portion of the parcel on which they sit, offering a cash purchase and a promise by the buyer to take care of normal closing costs, provided the homeowner does not broadcast their intent to sell.
Residents report notes left on their doors, direct mail bearing a picture of their own home and even direct phone calls soliciting sales.
That practice is called by many names, including off-market listing, pocket listing or quiet listing, and while it is completely legal, it often is a bad deal for sellers in hot markets like Santa Monica, said Don Faught, president of the California Association of Realtors.
It has its uses, particularly when the seller is a celebrity or other high-profile individual who wants to keep the sale of their home on the down-low, but average homeowners tend to get more for their properties when they advertise them widely, Faught said.
Home prices across Southern California hit a 56-month high in March, rising 23.4 percent from March 2012, according to DataQuick, a real estate news site. Despite rising prices, the unsold inventory index — the number of months it would take to sell the current supply of homes on the market at the current sales pace — is 2.7 months for Los Angeles County.
Six to seven months is considered “normal,” said Lotus Lou, media relations manager for the California Association of Realtors.
In Santa Monica alone, the assessed value of residential real estate jumped by $1.121 billion in 2011, according to a report released in September by the Los Angeles County Assessor’s Office.
Even multi-million dollar homes are flying off the shelves, with the sale rate of homes priced at $1 million or more at its highest level since 2007, according to DataQuick.
That’s partially a result of the recovering economy, rising home prices and record number of cash purchases as well-capitalized buyers negotiate a market in which it’s difficult to get a mortgage, according to the site.
Thomas Magiar, a realtor with the WSA Partnership-Coldwell Banker on Montana Avenue, represents several such buyers — developers promising cash for homes in the north of Montana neighborhood.
Magiar dropped off letters at homes in the area that were “under-improved for the extreme value” of their location, usually one-story houses on a property that could accommodate a larger structure.
He believes that quiet listings offer some benefit to the seller like avoiding the circus of promoting their homes to outside buyers. It’s not right for all sellers, but for the small homes north of Montana Avenue, they could get a better deal than they would if they put money into their homes to fix any existing problems and then went out on the open market, he said.
“There it’s very clear because there are a lot of people who want to move to the neighborhood, have money and want to build,” he said.
Developers can buy up an old property for a couple million dollars, demolish the existing home and build a two-story luxury home where an old Craftsman once was. Those can sell for $4 to $5 million, even higher if it’s near the beach, Magiar said.
That’s not much of a selling point for Doris Sosin, one of the founders of the North of Montana Neighborhood Association, who lives on 12th Street.
Sosin received one of Magiar’s flyers, and she’s also received phone calls and mail, all of which have picked up since the economy began to improve.
At least one Sunset Park resident has also received a request for a sale which appeared to be a handwritten note that turned out to be a computer-generated form on closer inspection.
Sosin led the charge in the late 1990s against “McMansions,” homes built to the margins of their property lines. They overshadowed neighboring properties, and led to the death of many mature trees that had to be removed so that the home could be built out.
Her work resulted in new rules around single-family homes, requiring set backs and imposing controls over how much of a parcel can be covered.
The attempts to build to even those restricted maximums are unwelcome, she said, because they only succeed in making neighborhoods more expensive to move in to and replace quaint, well-loved homes with larger versions.
You don’t need six bathrooms for two people, she said.
“My goal is to make the quality of life that I’m living right now, the quality for me and my neighbors, better,” Sosin said. “That’s what I care about.”