Quake Lets the Savvy Relive a Bit of ‘80s Real Estate Madness : ‘I will do an earthquake special myself. It’s a way for us to buy in a higher price range.’

As they motor toward the house in Granada Hills, Staci Treloggen asks the two other real estate agents in her Acura, “Am I going to be scared going in this one?”

Stephen Kaseno says, “Nah, I don’t think so. Not this one.”

Of course, you never know with one of these houses damaged in the Northridge earthquake, then abandoned. Cabinets can collapse on you, or even a wall. There can be squatters inside, or dead rats. Or “who knows what,” Treloggen notes.

A minute off the freeway, they spot the morning’s target. “Over there!” says the third of the trio, Robert Crubaugh, “Behind the fence.”

It’s one of those chain-link rent-a-fences that sprouted all over after last year’s quake, here amid a modern-era Valley subdivision, with rows of look-alike, red-tile-roof homes a touch too large for their lots.

And this one clearly is a mess, though one feature remains firmly in place--the Christmas lights. From the Christmas of ’93.

But the front door is boarded. The chimney is shot. The garage door is buckled.

Then they go inside, through the sliding back door. No rats or squatters, but . . . there’s a hole in the ceiling, a chunk of insulation hanging down it. There are cracks in the walls. There are cracks in the slab under the carpet.

And “look at this crack out here!” Treloggen announces from the patio.

Kaseno rushes over with his camera, takes a picture. “Major foundation problems,” he says.

But, wait, there’s more.

Crubaugh, walking up the stairs, calls down, “It’s tilting! This whole side is leaning.”

Yes, it’s quite a mess, this four-bedroom slice of suburban nightmare. All of which hardly daunts the trio of real estate pros, for houses like this have made the great L.A. land game fun again in the year since the 6.7 wake-up call.

The earthquake, you see, has made it possible, if you know what you’re looking for, to reprise the favorite speculation formula of the ‘80s, the one that goes: “Buy ‘em, fix ‘em and turn ‘em.”

*

Treloggen was one of many who got a start during that go-go era, when trading in houses became the favorite pastime in town. Young couples could begin at entry level, slap on some whitewash and Berber carpets, then turn ‘er over--and buy a notch up. Housewives sold houses on the side, while would-be actors abandoned the food service trade to show estates on weekends.

So when Treloggen’s dad, an entertainment industry type, began buying houses on the side, she went into the biz, at 19, to help him “fix and turn” a dozen or so.

Then came the recession. “Fix and turn” became “turn and burn” for scores of speculators, and the ranks of real estate dealers shrank as the pretenders dropped away. But a hard-nosed core survived, and she was one of them. By 1995, at 28, she had worked her way up at the Jon Douglas Co. to a mass-marketing job, handling--among other properties--houses that had fallen into foreclosure and were being sold by banks and mortgage companies.

It was one of those homes that had brought her, and the two other Jon Douglas agents, to the heart of the quake zone. Their mission was to prepare a BPO--a “brokers’ price opinion”--on 2,800 cracked square feet of house, to advise the bank what it might bring on the market now.

Another veteran real estate person in the area estimates that “well into the hundreds, if not thousands” of homes were pushed into foreclosure by the quake, despite the massive government assistance available. In these cases, the owners had no private earthquake insurance to help, and often were already struggling with their investment. Even before the ground shook, the declining market had turned them “upside down,” in the endless lingo of the trade--they owed more on their home than it was worth.

Some homeowners simply disappeared, while others stopped by the bank, Kaseno said, to “drop the keys and say, ‘Here, I don’t want my house anymore.’ ”

There were few remnants of the departed Granada Hills family, but the wallpaper on two small bedrooms suggested they had a pair of young girls.

Pre-quake, their home might have sold for $350,000. Before examining the inside, the real estate brokers guessed it might bring $165,000 now, “as is.” After reviewing all the damage, however, they decide that may be too high.

The chimney and fireplace will cost perhaps $9,000 to fix, the roof $12,000. And that’s pocket change compared to replacing the walls of the house. If the average person had that job done, it alone could cost $100,000, pricing the project off the charts. That’s why this home, the brokers agree, will be advertised as a “contractor’s special”--only a builder, who can do the work at cost, could pull it off.

Even then, with all the damage, “I think we have to go lower” than the $165,000 estimate, Treloggen says finally, “and list it at 150.”

She and her colleagues quickly run through the math: A contractor picks it up for the $150,000. Since he incurs virtually no labor expense, he might be able to complete all the repairs for $75,000 to $100,000, meaning a total investment of $250,000, at most.

“Then you put a 349 list on it,” says Kaseno.

“And sell it for 320,” says Treloggen.

Thus go the dollars and sense of the marketplace, finding the numbers that will provide incentive to restore a patch of damaged turf. This job won’t be pulled off by government funds, but by the prospect of a profit.

*

During the boom of the ‘80s, everyone and his uncle, it seemed, could be a winner at the fix-it-up game. Prices were rising by the month and a clean house drew multiple offers, if you weren’t asking the moon.

Now, with home prices stagnant at best, there is a more limited roster of players. On the ride back to the office in Sherman Oaks, Treloggen tells her colleagues of several, including a Westlake Village man who is churning about 50 homes at any one time and has examined scores of quake properties; he’s just finishing repairs on one in the West Valley that he bought Dec. 29.

Then there’s the Beverly Hills investor who picked up a condo in a devastated pocket of Sherman Oaks--the two-bedroom unit went for $95,000, including the “special assessment” fee to the condo association, which will soon fix the entire building. Before the quake, units there went for up to $300,000. “All he has to do is hold it a few months,” she says.

But it’s not only professional speculators who have found that the quake provided an opportunity to reprise a bit of the ‘80s. Some homeowners collected on their insurance, then used the checks, sometimes $100,000 or more, not to make repairs, but to put a down payment on a new place. To “buy up.”

Treloggen calls to the back seat, “You bought a place yet?”

It seems the 29-year-old Kaseno is newly engaged, and planning to plunge into the market.

“Not yet,” he says, “but I will do an earthquake special myself. It’s a way for us to buy in a higher price range.”

Another variation on the theme. He’s gonna buy it, fix it . . . and actually live in it.