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Bad Location? : Here's good news: What one buyer considers a problem, another may see as an asset, particularly if it means getting more home for the money.

June 04, 1995|ELLEN MELINKOFF | SPECIAL TO THE TIMES; Melinkoff is a Los Angeles freelance writer. and

Marty Rodriguez, a real estate agent with Century 21 Alosta, was showing a property she had not previously inspected in person. As she took the prospective buyers, a couple buying for his retired parents, into the back yard, she blanched at the sight of a Kmart on the other side of the back wall. She was sure that this would be the "deal wrecker."

But before the realtor could say anything, she heard, "Wow! Kmart! Mom and Dad will love it. They can walk over."

Sold!

The moral, of course, is that in real estate, as in relationships, there really may be a lid for every pot. Sometimes one person's liability is another person's asset.

Even a bad location? Yes. Those three cardinal rules of real estate--location, location, location--can be quite subjective. After all, there are thousands of people living across the street from freeways or next door to Target stores. Are they all masochists? Or have they been lulled into acceptance by the sense of having made a good deal. Probably the latter. There's enough difference of opinion of what constitutes the good life to keep most of them owner occupied.

Real estate experts call a bad location an "incurable defect." Neither the seller nor the buyer can fix it, paint it, tear it down or shore it up. It won't go away. If you're the seller, the only real question is how low will you go? If you're the buyer, the only questions are: How bad is it and can you live with it?

Could you live with a freeway across the street? A toxic dump down the block? A dairy upwind? The underbelly of a 737 overhead? All are bad locations.

But probably good deals.

"A bad location usually means more of something," said Mark Meng, an agent with Prudential California Realty in Long Beach. "More good and more bad."

On the plus side, more house for the money. More square footage. A four-bedroom house for the price of two bedrooms. More lawn: a quarter of an acre for the price of an eighth.

The downside: more traffic, more dirt, more noise. More difficult to sell. More trouble.

A badly located property, or as Temmi Walker, an agent with the Rodeo Division of Prudential California Realty, prefers to call them "properties in less agreeable locations," may be a buyer's only way of moving into an area.

Jason Hoffs, vice president of development with Steven Spielberg's new studio, DreamWorks SKG, is a classic case. When he was looking for his first home in 1987, he didn't have a lot of money. "I wanted a duplex. I liked the Miracle Mile neighborhood a lot," he said. So he bought on Olympic Boulevard, near Fairfax Avenue, with six lanes of rush-hour traffic right outside the door.

However, the price for two one-bedroom apartments, side by side, was "$100,000 less than other places half a block away."

"I was pretty sure I could put up with the noise," he recalled, "and after a few weeks, I didn't really notice the noise except when an 18-wheeler rolled by." Hoffs was busy with work and not home much, but he liked the neighborhood when he was there. And he kept the other apartment rented without much difficulty.

He also kept the windows shut on the Olympic side "or I couldn't hear on the phone. It was like the Indy 500 out there." And not just noise. Dirt. "All the dirt surprised me," he said. More reason to keep the windows tightly shut.

After a few years, the noise and the dirt starting bothering him. When he finally decided to put the property on market, it was 1993--not the best time to sell anything. "It was incredibly difficult to sell in a down market," he said. "I had to be incredibly aggressive in lowering the price." He dropped the price $20,000 a week until he got a buyer who sensed a good deal. "I sold it in 1993 for the same price I bought it for in 1987. But I could have doubled it if I'd sold in 1990."

Hoffs' experience is typical--from his motivation (getting into a neighborhood he couldn't otherwise afford) to his getting accustomed to the noise (real estate agents say that most buyers report a tuning out) to his problem of selling in a slow market.

Real estate agents agree that when it comes time to sell and the market is up, a bad location is not the albatross it becomes when the market is down. But it's still a slow sale.

"In the '80s, a bad location wasn't the problem it is today," said Ron Prechtl, of Century 21 Lamb in Northridge. "Now with all the forced inventory on the market--foreclosures and distressed property--the consumer has more choices. In a sluggish economy, buyers have plenty of good deals to choose from."

But, Prechtl believes, "There's nothing that price won't cure." Lower the price enough and someone will make an offer. The buyers themselves decide what is a bad location. "There are lots of busy streets, and people are living in all those houses, often original owners from the '50s," Prechtl said. One person's quick access to Kmart is another person's urban nightmare.

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