Spy Before You Buy?

Gossip among neighbors on the upscale La Jolla street suggested that a wealthy resident who never worked but drove a Mercedes was a mobster.

“The whole neighborhood thought he was in the Mafia,” said private detective R.W. “Pete” Peterson, who was retained in August 1995, to do a thorough background check on the man by a couple interested in buying a home in the neighborhood.

In an investigation that took three weeks and cost $6,000, Peterson and his agents checked out banks on the East Coast, went through the man’s trash, and more. “We had to do some fairly surreptitious things,” said Peterson, a private detective for 22 years with offices in Los Angeles, San Diego, Denver and Chicago.

The investigation and surveillance revealed that the man they were snooping on got his money not from drugs but trust funds. Peterson’s clients bought the house.

While investigations of prospective neighbors and neighborhoods are not common in real estate transactions, several Southland private detective agencies said they are doing more and more of them, mostly for high-end home buyers with security and privacy concerns.

And Los Angeles is not the only place it is happening.

The Sunday Times of London reported recently that the Assn. of British Investigators reports a large increase in the number of neighborhood watch cases requested by worried homeowners.

“We have had triple the requests in the past year with most detectives now getting 15 or 20 a year,” said Richard Jacques-Turner, president of the ABI, which represents 460 agencies.

However, nearly a dozen Realtors in Los Angeles and Orange counties interviewed for this story say they have no knowledge of the practice going on here.

Some said neighbor investigations are unnecessary; others were offended by the practice.

“I know everything that goes on,” said Elaine Young of Coldwell Banker in Beverly Hills. “All you have to do is call a title company.”

Said Gil Foerster, partner in Waterfront Homes in Newport Beach: “I can’t think of anything more repugnant.”

Added Stephen Shapiro of Stan Herman/Stephen Shapiro & Associates, Beverly Hills: “They [private detectives] want to increase the level of paranoia to increase their level of work.”

But Cecelia Waeschle of Prudential Rodeo Realty thinks that employing investigators makes sense.

“I think it’s a great idea,” she said. “Very often the broker won’t know the neighborhood as well as the neighbors. . . . You can never be too sure.”

Linda May of Fred Sands Realtors in Beverly Hills said she believes, as do most agents, that the state-mandated Transfer Disclosure Statement should reveal any potential neighborhood problems.

The disclosure law, in effect since the late 1980s, requires home sellers and their agents to tell buyers, by means of a disclosure form, anything that might affect the value of the home. One question asks “yes” or “no” about “neighborhood noise problems or other nuisances” and provides several lines for response.

But Gov Hutchinson, assistant general counsel to the California Assn. of Realtors in Los Angeles, cautioned that not every issue can be addressed with the form.

“The Transfer Disclosure Statement is the minimum mandatory statement, but it doesn’t necessarily tell buyers what they want to know, “ he said.

Which is why a home buyer might turn to a private detective to help check out a neighborhood. Peterson said the buyer might not necessarily trust the homeowner or his representatives.

A previous bad experience with neighbors or a substantive need for security are two more reasons, said John Nazarian, an investigator with offices in Century City and San Francisco.

Sometimes, a detective’s skills at observation can save the home buyer from making a costly mistake. Last year, Nazarian cautioned one client not to purchase a home because the next-door neighbor had an inordinate amount of oil on his driveway.

When Nazarian learned that the neighbor was moonlighting by fixing cars in Pacific Heights, an expensive San Francisco neighborhood, his client opted to purchase instead in suburban Walnut Creek.

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Some security firms have also expanded into investigative services. A wealthy couple who had been using Carson-based Gennao Inc. for personal protection services grew weary after a year of fruitless searching for a home in Beverly Hills that combined an unremarkable exterior with plenty of interior amenities that could at the same time provide optimum security.

Gennao’s owner, Conrad Poe, sent Richard Welby, an executive protection specialist, along with the husband and wife to inspect properties under their consideration.

Welby checked for multiple evacuation routes from the homes, quality of the security systems and how to enhance window and wall protection. He nixed a hillside house because it would require inordinately expensive security.

After seeing five properties, the couple agreed that the last house met their needs. Then the agent drove around the neighborhood by himself, went to the police for a report on nearby activity and wrote a risk assessment. The couple bought the house, where they’ve lived for the last three years.

Some detectives have been doing neighborhood checks for years, and not just for the wealthy. Fifteen years, ago, John T. Lynch, a private detective in downtown Los Angeles, received his first call for a “neighborhood inquiry” in South Gate from an immigrant couple new to Southern California.

“The neighborhood was good, the school system was OK, but the best area was Downey, with an excellent school system, low crime rate and property values that reflected it,” Lynch said.

In spite of price concerns, the couple found two potential homes in Downey. Lynch then ran another check, visited the police and talked to the neighbors. Posing as a would-be buyer, he inquired, “Would I be happy living here with my kids?”

Spanning several hours over three days, the investigation cost $150. Today, at Lynch’s rate of $50 an hour, he figures it would cost $250.

In Orange County, executive search firms use the services of John Talaganis of J.H.R.I. Inc. in Fullerton to do “activity checks” of neighborhoods for out-of-town executives moving to areas like Laguna Hills, Rancho Santa Margarita, Irvine and Costa Mesa.

Talaganis said he has done about six since June 1995, at prices ranging from $200 to $1,000.

His six-point investigations include checking whether neighbors are renting or own their property and how many children live there, reviewing the police log for the number of calls to the block, inspecting within a three-block radius for graffiti, driving by at night during the week and on weekends, determining crime rate from Neighborhood Watch captains and clocking the distance from the residence to schools and shopping centers.

Because this new work comes from firms that have previously used him to do background checks on their candidates, Talaganis says the whole atmosphere is “very businesslike, to the point and matter of fact.”

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That’s a far cry from some of the troubled waters detectives see when they work for homeowners already stuck with bad neighbors.

Nazarian said one client, a young woman living in a West Los Angeles condo, has had several physical confrontations with a female neighbor, who is now playing “dirty tricks” on her.

The client says the woman is pulling plants out of her planters and throwing them on the ground, blocking her door with wood chips from planter boxes, making complaints to the police, reporting her to the homeowners association and keeping her from sleeping.

Nazarian began investigating several months ago and recently began video surveillance. He estimates that his investigation, video surveillance and his client’s attorney fees now total about $10,000.

Nazarian, who charges $75 to $125 an hour, said he gets 15 to 30 calls a year from house hunters and unhappy homeowners. He said the number has increased within the last three years.

One of the worst stories about the proverbial “neighbors from hell” comes from Peterson, who recalls that in 1992, a couple with two young children in Denver drew the ire of an elderly man nearby. First, the family’s dog was poisoned. Then they began receiving unwanted deliveries and getting harassing phone calls. After a year and a half of such torment, they put the house on the market and finally sold it for 10% under value. In the meantime, the neighbor tried to scare off potential buyers.

When the house finally sold, it didn’t do the family much good. The man who had beleaguered them moved within five houses of their new property. When Peterson was called, he did a background check that yielded no criminal past. So he recommended the family get a restraining order. Subsequently, both the police and Peterson paid the troublemaker a visit in his new home.

Describing the neighbor as “fearful of authority,” Peterson said, “I think he finally just gave up on it once he started seeing police cars, our van sitting there and the restraining order.” Cost of Peterson’s services: $500.

“Most people don’t discover any problems until they have moved in,” said Jacques-Turner, president of the British investigators association, “but road rage has found its way into the home, and neighbors think it’s their God-given right to get revenge. A small dispute can escalate into an unbearable situation.”

Added Peterson: “Neighborhood wars are not uncommon over dogs and kids. They can start that way. . . . People retaliate and things can get pretty bizarre. If anyone is going to make that kind of investment [in a home] it behooves them to do their own homework and, if they find potential problems, check further or look somewhere else.”