O.C. Disaster Used as Sales Pitch for L.A. : Real estate: Since Orange County filed for bankruptcy, prospective home buyers are discreetly being wooed back.

Such traumas as riots, earthquakes and random acts of violence have driven thousands of Angelenos from their homes and into the relatively safe, master-planned arms of Orange County in recent years.

But with the widespread uncertainty and fear sparked by the nation’s largest municipal bankruptcy filing, some Los Angeles County real estate brokers along the Orange County border are taking advantage of the opportunity to woo home buyers back.

Concerned about reduced social services, the specter of higher taxes and possible cutbacks to education, some buyers are thinking twice about moving into an Orange County dream home, brokers said. Agents are quietly chuckling with glee as Orange County real estate brokers--who for years have touted their area’s lower crime rate, quality of schools, standard of living and newer infrastructure--find themselves at a disadvantage.

“Sure, Los Angeles realtors are using the bankruptcy as a selling tool,” said Patricia Neal, a Garden Grove agent and former president of the California Assn. of Realtors. “I know the Orange County realtors sure used the riots, so I guess now it’s a tit for tat.”

Agents in Los Angeles County are discreetly mentioning to clients the possible fiscal fallout of Orange County’s decision to file bankruptcy. Cities that hug Orange County’s northern edge, such as Bellflower, Cerritos and Long Beach, may even see a slight boost in sales as residents to the south decide to leave the bankrupt county, some brokers hopefully suggested.

“We’re seeing Orange County buyers come back into the L.A. markets due to the bankruptcy. They are concerned about what will happen to the schools there and they don’t think we have the same problems,” said Yvonne Kelly-Brazell, a real estate agent with Prudential California Realty in Long Beach.

Calling the fears created by the Orange County bankruptcy an “excellent selling point” for Long Beach, Kelly-Brazell said the buyers she represents do not want to be faced with any added costs after paying for a new home.

“In Long Beach you’re not going to be levied with any surprise extra tax, either sales taxes or property,” she said. “And the buyers I deal with are afraid of the unknown.”

Richard Gaylord, two-time president of the Greater Long Beach Assn. of Realtors, said the bankruptcy was a “final straw factor” for some families considering a move from Orange County for reasons unrelated to the fiscal debacle.

Two families he represents have decided to move from Orange County neighborhoods.

And that, Gaylord said, is only fitting. After the 1992 riots in Los Angeles, Orange County cities such as Irvine ran large advertisements in Long Beach newspapers touting the benefits of Orange County life, he recalled.

“So now, I think it’s only fair for Long Beach to have its day,” he said.

That is just plain hogwash, said Bill Cote, a real estate broker with Cote Realty Group in Newport Beach.

An Orange County broker for 26 years, Cote said Los Angeles County just does not have the benefits offered by Orange County.

“People still want to move here because even as a bankrupt county we have a better school system than Long Beach,” said Cote, who specializes in homes in the $500,000 to $1 million range.

“The quality of life here is 10 times better than it ever will be in Los Angeles. That’s why so many people live here and commute to Los Angeles every day.”

But in Long Beach, Coldwell Banker real estate agent Gregory Baker, who said his office is not using the bankruptcy as a selling tool, countered that some buyers once considering leaving the area for a bigger home in Orange County are thinking again.

“A lot of folks, if they were thinking about moving in the direction of Orange County are having second thoughts,” Baker said. “People who might have moved from Long Beach to Orange County and bought a bigger house may decide to just stay right here.”

Real estate agents in Long Beach, Bellflower, Paramount, Cerritos and Whittier said that although the bankruptcy fallout is yet to be fully felt in Orange County, some potential home buyers want to stay in areas where the local governments seems a little more solid.

“If you move to Bellflower you can still work in Torrance or Fullerton and get there in minutes,” said Nancy Prigmore, a real estate agent with Prigmore Realty in Bellflower. “It’s easy access to the freeways and you don’t have to sit around wondering when your neighborhood school is going to go bankrupt.”

This kind of talk means war, said the beleaguered Orange County brokers, tired of addressing bankruptcy fallout questions.

“Time and time again we hear about the bankruptcy from buyers--it’s a constant thing,” said Bob Hackett of FirstTeam Real Estate in Anaheim Hills. “They’re turned off to the idea of moving to Orange County from the South Bay now. They just want to wait till this thing gets settled.”

The effects of bankruptcy fallout fears will likely linger throughout the year, said Walter Hahn, director of Orange County real estate consulting for the Kenneth Leventhal & Co. accounting firm.

“It’s pretty obvious that the bankruptcy is having a negative effect on home sales here,” Hahn said. “Buyers are deciding to postpone decisions.”

That is bad news for Orange County’s fledgling real estate recovery. After four years of a real estate bust that pushed home prices down 25% or more, 1994 was a near record year for home sales in California.

Especially strong were sales in Orange County, where new home sales jumped more than 30%.

The boost in sales occurred despite six increases in interest rates, which meant higher mortgage costs for homeowners.

The rate hikes also caused $1.7 billion in losses to Orange County’s investment pool, which had borrowed heavily to buy derivative securities that were especially vulnerable to interest rate swings.

Because of the losses, the county was forced to file for bankruptcy Dec. 6. That month, new home sales in Orange County stayed flat.

By January, a month that also included record rains and flooding, home sales in Orange County had nose-dived about 27% from the same time last year. Home sales continued to fall in February; for the first three weeks new home sales dropped about 15%, Hahn said.

Although much of the falloff in California is because of buyers’ concern about economic trends and possible further hikes in interest rates, the drop in Orange County is compounded by skittish buyers also worried about the bankruptcy.

With two children in school, Marjorie Kellen of Norwalk said she was interested in moving to Orange County because she wanted to put her children in better school districts. Now, she is not so sure it would be better.

“I feel caught between a rock and a hard place,” Kellen said. “I’m concerned they might cut school programs in Orange County and lay off teachers, but the schools here aren’t so good, either. Also, when I tell friends I want to move to Orange County they say, ‘You can’t! They’ve gone bankrupt.’ ”

In Cerritos, Carolee Walker Davies, a broker and owner of Coldwell Banker Towne Center, said some potential home buyers, especially those from the Pacific Rim, were weighing home buying decisions between the Cerritos area and Orange County.

Buyers want to know whether if they purchase an Orange County home there will be “more taxes and less police,” Davies said. “We just say we don’t know, but it could happen.”

Although Davies said she never uses the bankruptcy as a selling tool, Jason Hartman, a real estate agent for ReMax of Irvine, said exploiting the county’s financial disaster is all part of the real estate game.

If the bankruptcy had occurred in Los Angeles County, brokers in Orange County areas would be doing the same thing, he said.

“Anybody who is in a competing area is going to use whatever they can,” he said. “We wouldn’t be immune to using it if it had happened in reverse.”