Home Economics Gone Mad

Kayla White realized her new job was going to be slightly different than she had imagined when the clients she had driven to an open house refused to get out of the car. “There was a line, like, out the door,” she said. “And this couple said they just couldn’t handle it, that they didn’t want to get involved in a bidding war. I could not think of a nice way to tell them, ‘Well, there’s no way you’re going to get a house then.’”

Just yards away from Pasadena’s Norton Simon Museum and right across the street from the local Jaguar and Rolls-Royce dealerships, the Coldwell Banker Previews office is not, perhaps, the embodiment of the term “in the trenches.” And yet, even as it sits placidly amid the noise and haste of Colorado Boulevard, within its walls roils an industry gone mad.

‘I Had No Idea How

Crazy It Was Going to Be’

The real estate agents here cover the San Gabriel Valley, including Pasadena, South Pasadena, Arcadia, Altadena, San Marino, La Canada. Many of these towns, particularly the ones with good schools, have been high-end for years. But lately, low interest rates, lack of inventory and an influx of Westsiders priced out of their neighborhoods have lifted some of the areas from high-end to prime.

“I had no idea how crazy it was going to be,” said White, who joined the office in March. “I walked into this one Craftsman on a pretty nice street. There was a 2-by-4 holding up the ceiling, and I almost fell through the floor on the way to the kitchen. It sold in less than a week, and I heard through the grapevine it went for over list [price].”

For agents new and seasoned, such a boom means many things--higher commissions, yes, but also more work and, to a certain extent, a new job description. Far from the stereotype of the ambitious ex-homemaker (think Annette Bening in “American Beauty”), an L.A.-area real estate agent is now often one part captain of industry, one part battalion commander and one part therapist. In this Coldwell Banker office, as, no doubt, in hundreds of realty offices in the area, multimillion-dollar deals are struck while five-figure-commission dreams are shattered, and someone has to fill out the forms and hand out the tissues.

Every agent has a briefcase full of stories like White’s. Stories about the open house where 150 groups showed up in the first two hours, of the tear-down probate that went for twice its appraised worth. Of buyers willing to make an offer 20% over the list price just so they won’t “lose” another house. Even of the buyer who added annual passes to Disneyland to his bid to make his offer stand out.

“We had one seller settle on one offer out of nine because of a dog,” said Pat Rowan, the office training director. Many agents, she explained, have long had their buyers write a brief letter introducing themselves to the sellers. Now these little notes have gained the clout, and anxiety level, of a college entrance essay.

“The buyer wrote about how great this house would be for them because it was a single level and they had this old dog who couldn’t get upstairs any more,” she said. “The sellers were dog lovers. Whatever works.”

Seller’s Market Can Be

Frustrating, Exhausting

The stories are outrageous and exciting, fun to hear and clearly fun to tell, but for new agents especially, the stories, like the houses, come with a very high price. Here, as in many other real estate offices, senior members split their time between listings (selling homes) and buyers, which are sometimes though not always the same people. The newer agents tend to spend most of their time working with first-time buyers, and working with first-time buyers in a seller’s market is frustrating, exhausting and often demoralizing.

“People say to me, ‘Gee, Ellie, this must be a great time for you,’” said Ellie Viray, who has been a Realtor-associate for two years. “And I think, in a way it is. But, in a way, it’s also really terrible.”

“Even under normal circumstances, buying and selling a house is one of the most stressful things a person deals with, after death and divorce,” said Jack Cooley, branch manager for the office. “But now it’s even harder. Even for the sellers this market is just very stressful.”

Real estate has long competed with Hollywood for top industry billing in Southern California, and over the past year a healthy growth has swelled into an unnerving surge. According to the California Assn. of Realtors, in L.A. County low interest rates and low inventory have cause the median price for a home to rise almost 20% in the last year to $267,000.

All the things real estate agents learned in class--from the timing and calculation of a bid to the protocol of an open house--have been thrown out the window. In a world where houses sell the day they go on the market; where it has become typical for sellers to get eight or 10 offers, all of them significantly higher than the asking price; where sellers are now so confident that they are often unwilling to negotiate on even the smallest points, these folks feel less like real estate agents and more like air traffic controllers.

Offers So High They Fail

to Qualify for a Loan

Lately, Cooley said, agents have had to deal with the unlikely problem of offers that are just too high--that would not be signed off on by a loan appraiser.

“We had one house that got a bid for $670 [thousand], and the appraiser came in and said this house is worth no more than $645 [thousand],” said Rowan. “So the bank will not OK the loan. Usually, then the buyer and the seller work out a compromise--the seller comes down, the buyer finds a little more money, but lately sellers have just gotten greedy. We’ve seen people walk away from a deal rather than lower the price, even when the appraiser says it’s overpriced.”

This adds another layer of tension to an already tense situation--agents are already warning prospective buyers that they will have to overbid, only now they have to tell them “but not by too much.”

“The pace is so intense I tell clients right up front that they have to be willing to go over list price and they have to be willing to pull the trigger instantly,” said Jeff Maynard.

Maynard, who has been in the business for four years, can say this easily, confidently, like a firm but fair football coach or sergeant. Some of the newer agents have a harder time.

“I did not realize how difficult it would be for me to tell someone, ‘I know it’s listed at $300,000, but it’s going to go for $330, so that is what we should offer,’” White said. “There is no way that is going to come out of my mouth and sound good.”

And sometimes the clients simply don’t believe it. Although even first-time home buyers are better educated about the market than ever, most are still shocked at the idea of overbidding, and many balk. Until they lose a house or two.

“Sometimes it takes a while for the market to validate what I tell them,” said Jack Nesbit, who has been with Coldwell for almost a year.

“People come in and say, ‘Well, my friend said this or my friend did that,” Viray said. “Friends are dangerous. Friends may ruin your deal.”

After giving them this good news, the relationship enters its hurry-up-and-wait phase. The low inventory that is driving housing prices up is driving agents crazy. Many find that weeks go by during which there are no houses to show their clients. And so they send determinedly optimistic notes or make determinedly cheerful calls just to let their clients know they haven’t left town.

“It is really hard when you have a buyer who is ready to go and the competition is so fierce,” Maynard said. “It’s hard for them to understand that where once there were 20 people looking for their house, now there are 70 or 80. Folks on the Westside have been dealing with this for years. That’s why I’m seeing so many Westsiders. But now it’s all over the area.”

For most people, looking for a house is never just a three-week proposition. But in this market, the relationship between client and real estate agent can last longer than some marriages. “I had one woman tell me that I talked to her husband more often than she did,” White said.

“You really become allies,” Viray said. “You see a lot of these people, and they get to know you pretty well.”

This makes success all the sweeter--the phone call informing a client that he or she “got the house” has always been a great moment. Now, it’s on par with informing someone they’ve won the lottery.

“You’re high for days,” White said.

Agents Caught Between

Buyers’ Reason, Panic

Of course, it’s not over until the fat lady, or the guy in the escrow office, sings. Like everything else in the process, inspection during escrow has become even more fraught. Sellers, who have often turned down many other offers, are not exactly enthusiastic about paying for such details as an ungrounded outlet, while the buyer, who has paid 10% over list price, wants everything perfect.

Caught in the middle are the agents. They have to appeal to the seller’s common sense (is it worth that $500 to start over with a new buyer?) and the buyer’s sheer panic. “Every buyer I have met thinks everything is going to cost $10,000,” Rowan said. “So we spend a lot of time getting them plumbers and roofers and painters to tell them exactly what it will cost, which is almost never $10,000.”

Then, she said, causing a hush to fall on the office, the parents arrive.

The parents, the other agents groan, oh right, the parents.

Most first-time buyers, it would seem, wait until the inspection process to show their parents their just-about-to-be new house. Sometimes the parents have a financial stake in the purchase; they almost always have an emotional stake.

“Here come people who haven’t bought a house in 20 years,” White said. “And they think this whole thing is just crazy. Paying this much money. Paying over list. They find things wrong with the house that the buyers just don’t care about.”

But if the market is tough these days, it’s also challenging enough to draw in a younger and better educated workforce than ever before. What often used to be a second or part-time career has now got real legs on the job market.

“We have a lot of agents in their early 30s. We have two agents in this office who are 21,” Rowan said. “Five years ago, this was unheard of. Unheard of.”

White became an agent after she and her husband had a less-than-satisfactory experience buying a house. “I figured I could do this much better,” she said. “And I have been completely surprised. I thought it was a sales position, that I’d try that for a while and see how it went. But it’s not that. It’s much more complicated than that.”

She, and many agents, wish the market would settle down almost as much as prospective buyers do. “It doesn’t seem fair to me that someone making $60,000 a year can’t afford a house in Pasadena,” she said.

For more senior agents, the late hours spent writing offers for a house seen that day, the evenings spent giving buyers pep talks and keeping sellers from overpricing and hyperventilating, have definitely been worth it, at least financially.

“I’ve already done as much business as I did all of last year,” Maynard said, “and last year was a good year.”

Still, even senior agents would like to see the market even out. “We like a neutral market,” Maynard said, “where sellers make money but the buyers aren’t getting clobbered.”

“It’s just too hot,” Cooley said. “I can’t imagine that it can continue. Of course,” he added with a rueful laugh, “I said that exact same thing this time last year.”