Realtors Target Smaller Teardown Homes for Redevelopment
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.
Deborah Silverstein of Rodeo Realty has had many developers approach her to help them find small tear down homes on 60 foot wide lots.
Her developers are now paying premiums for these lots. The developers are paying all cash and close escrow in one week. They offer the home owners to lease back the property for Free sometime for as much as 5 months after close of escrow.