A New Line on Home Buying : Professional Place Holders Emerge as Part of a Sellers’ Market
Ira Abrams, a San Marcos veterinarian, was house hunting. So, when he saw a sign on Alga Road just north of La Costa in Carlsbad announcing the opening of a new housing development called Alga Hills, Abrams decided to go for it.
But he was not alone. More than 1,800 people inquired about Alga Hills, and nearly 3,000 people attended the preview in mid-August, a week before the first 25 homes were put up for sale by developer Fieldstone. The day of the preview, 180 people talked to Alga Hills sales manager Stacy Foster about the 25 homes going up for sale the following week.
But those people were already too late. With the homes selling for prices starting at $245,000 on a first-come, first-serve basis, the line to buy had formed the day before the preview began. By the time the models officially opened for viewing, more than 30 people were camped out. They had stayed at the construction site around the clock until the homes went on sale.
Camping Out for a Fee
Although Ira Abrams did not personally camp out, he was able to buy a home. How? Before the preview, Abrams had hired a man named Charley Osterhold to hold his place in line for a fee. Osterhold is an example of the small but growing cottage industry of subdivision line holders and also a symptom of the drastic supply-demand imbalance in San Diego housing.
Of the 32 people at the eight-night camp-out at Alga Hills, for example, 28 were professional line holders. Each was paid as much as $60 a day by prospective home buyers.
Alga Hills was hardly the first development in which people have camped out for the right to buy a home. “We have had a camp-out for almost every project for that past seven or eight years,” said Mike Stewart, Fieldstone’s Alga Hills project manager. Several other builders, including McMillin Communities and Baldwin Cos., have reported camp-outs as well.
But the nature of the camp-outs has changed. Once, prospective home owners themselves camped out, often building a sense of neighborhood in the process, said Foster, who has camped twice for her own homes.
Tightening Housing Market
But, according to Linda Parsons, senior vice president of McMillin Realty, the sales and marketing arm of McMillin Communities, the market got so heated that the camp-outs got longer and longer. It got to the point that typical home buyers with jobs couldn’t afford to spend a week off work camping out themselves, Parsons said.
Into the breach stepped professional house sitters, many of them retirees, who figured they could provide a needed service at a reasonable cost.
The emergence of professional line holding is a direct result of a tightening new housing market and rising prices, said Eleanor Madsen, research director for Home Builders Research, a local market research group. In July, the number of active housing subdivisions in San Diego county had dropped to 147, from 253 a year earlier. The number of new-home sales dipped to 837, contrasted with 1,114 in July, 1988.
“The numbers reflect a reduced inventory,” Madsen said. “You have a lot of qualified buyers desperately looking for a new home.”
The economics of hiring a line sitter often makes sense, considering that in May the median price for a new single-family detached home in the county was $227,990, according to the San Diego Building Industry Assn.
“If you are looking at paying $300,000 for a house, $60 a day to hold a place in line does not seem unreasonable,” said a line holder who identified himself only as “Junior,” a 68-year-old retired contractor who lives full time in his recreational vehicle, staying at state parks when he is not on a job. Junior said his camp-outs typically last one to two weeks.
Part of the Investment
Many people see the cost of paying a line holder as a part of their investment, which they will recoup through the appreciation of the house. Though Fieldstone has not set the prices for the next release of homes at Alga Hills, campers say rumor has it that prices will go up by about $15,000, dwarfing the $480 it would cost to pay a sitter for, say, eight days.
In fact, one home shopper who arrived too late to get a place in line at Alga Hills offered several line holders $5,000 for their spots. No one accepted.
Not everyone in line is a happy camper, however. During the course of the Alga Hills camp out, rumors flew that the professional with the first spot in line, who customarily takes roll and maintains the official list of who is in line, was receiving kickbacks from other professional line holders or was favoring other professionals at the expense of the actual buyers camping out.
Although the rumors could not be confirmed, the unhappiness was strong enough that Alga Hills sales manager Stacy Foster said she would bar that particular line holder from Fieldstone developments.
As professional line holding has grown, hard feelings seemingly have become common at camp-outs. “There is a lot of confusion, misunderstanding and fighting,” said Bernadette Cascio, owner of House Sitters International, one of the originators of professional line sitting. “I have heard the stories about kickbacks as well.”
With that in mind, some developers refuse to allow camp-outs or have abandoned them. “I think camp-outs are dehumanizing,” said William Probert, vice president of sales and marketing at Presley of San Diego home builders. “Nobody should have to go through one.”
McMillin Communities allowed camp-outs until a year ago, when it switched to a priority system. Presley also uses a priority system in which people on an interest list return postcards to establish a priority list. They then must periodically check in to maintain their place.
Company Uses Lottery
Last year, Baldwin halted camp-outs as well. “There was a widespread feeling that they were uncomfortable and inconvenient,” said Sandra J. Perlatti, vice president, sales and marketing. After experimenting with a priority list, the company instituted a lottery for its Paloma project in San Marcos this April. Within two weeks, the company sold the 100 homes in the first phase of the 650-unit development.
For its part, Fieldstone defends camp-outs as the fairest method for determining who gets to buy homes. “In my experience with lotteries, you have had to submit everything but your dental records, and then never get called,” said Foster.
Added Presley’s Probert: “Lotteries make buying a home a chance thing. It shouldn’t be a chance thing.”
The problem with a check-in system, as opposed to round-the-clock camping, Foster said, is “everyday somebody has a story why they couldn’t check in.” The drawback with priority lists, Baldwin’s Perlatti pointed out, is that, “by the time somebody expresses interest, they may be number 2,000 on the list,” which can be discouraging.
That can be minimized, Probert argued, by systematically purging the list to identify the real potential buyers.
In the final analysis, Perlatti said, “All three are viable procedures, depending on the project.”
Fieldstone officials seem genuinely concerned about the potential for abuse in the camp-out system. “We don’t want professional line sitters soliciting potential buyers,” Foster said. But the company also seems committed to allowing camp-outs to occur.
Still, even the winners at Alga Hills seemed troubled by the process. Though he is enthusiastic about his new home, Ira Abrams said, “I am not saying it is fair. But it is the system.”
