Hemet, CA

Is it Time to Sell...or Renovate?

Many Hemet and San Jacinto, CA homeowners have been hit hard with the loss of equity, due to the collapse of our housing market and the decline in our general economic conditions.

The down-side is many people thought they were buying a home as a stepping stone...thinking that their real estate investment in the Hemet - San Jacinto CA market would be a place to establish roots with a starter home and then they would be able to sell in a couple of years to another first time homebuyer - taking out the equity they planned on earning and applying it to a larger home to grow in.

Unfortunately, there are a lot of shattered dreams in the Hemet - San Jacinto valley. Many families today are living in over-crowded conditions and just don't know what to do. Yes, they can afford their payments and yes they want to protect their credit...but many feel as if they just need a bigger home.

Well for those who either may still have some equity or have good credit...or even some cash stashed for a project now is an excellent time to consider putting off selling your home and looking to expand what you've got.

A well-designed renovation or room addition can not only ease the dilemma of space but add value to your home as well. It's true that most improvements don't return 100% on the investment - but all wise improvements do make the home easier to market and make it more desirable when it is time to sell.

REASONS TO CONSIDER A REMODEL / RENOVATION

1)... Contractors have definitely felt the pinch in the current economic times with the decline in the housing market, many homeowners can't afford to spend money on their homes - so the contractors are often willing to lower their bids for specific projects, in the Hemet - San Jacinto Valley.

2) The Selection of contractors is greater - since fewer of them are working steadily. Here in the Hemet - San Jacinto Valley in Southern California it is not unusual to have multiple contractors competing for against each other to be selected to complete your project and add value to your real estate.

3) The Cost of financing is way down. Regardless if you are using home equity or other established credit lines, lenders are also very competitive when it comes to loaning on real estate projects. It's times like this that your good credit and savvy financial planning pay off in a big way.

4) Supply and Demand is always an equation when it comes to any type of real estate transaction - it doesn't matter if you want to buy a house, sell a house or remodel your home. When the demand is down there will be greater supply and that holds true for building and raw materials as well. With fewer construction projects taking place, the demand for building materials also decreases and with it the price drops making fixing your home that much less expensive.

5) Waiting Time for the best known and most highly skilled contractors and artisans is reduced. I can remember, not so long ago a certain landscape designer would have a 9 month waiting list to take on new jobs - he was that good. Give him a call today and you'll probably see him by the end of the week, or next week at the latest. So the quality workers may still be working - but the time to get that someone special might be a whole lot easier...and they may now be willing to travel a little bit further.

6) Service with a Smile is much more likely. Now is the time for all businesses to improve on their customer service if they plan on riding out the storm. Most contractors, like most professional businesses in the Hemet - San Jacinto Valley know they have to provide superior service now, more than ever. I'm almost willing to bet that MOST contractors you call these days will be returned. Let me gout on a limb and even guess that most jobs will also start on time and be finished on time...can it get any better?

WORD OF CAUTION

If you are going to go ahead an look into a remodel or renovation then please do your homework on the contractor you select. Check with the Contractors State License Board and verify that the license is in good standing. Verify insurance, bonds and just as important spot-check several of their jobs. Any contractor will provide references - but take the time to go by the job and inspect the work and talk with the previous client...this bit of due diligence can pay for itself many times over.

There are still a lot of scammers and scam artists out there looking to separate you from your money, but if you are in the market to fix up your home, then now is the perfect time.

45 Day Escrow...All the Time in the World, Right? WRONG!

The real estate market in the Hemet - San Jacinto Valley, CA is dominated with investors and first-time homebuyers. The investors have all been through escrows and know what is expected of them to close and close on time, without incurring hefty per diem charges for delays. First-time homebuyers more often resemble a deer in headlights, believing that 45 days is plenty of time for everyone to do their job.

The first time homebuyer who now has successfully negotiated a purchase contract, with the help of their REALTOR® or other real estate agent now has the real work cut out.

I'll often joke with buyers, very early in the process, when I'm assisting them with the ‘pre-approval' process that once they have been pre-approved we'll know exactly how much money they have to spend, and being the bona-fide shopaholics that I am, I can easily help them spend their money. I'll go on to explain that getting into escrow is the easy and fun part - where I earn my money is getting out of escrow.

TIME FOR THE BUYER TO GO TO WORK

Perhaps the most critical actions any buyer can do is be prepared with supporting documentation that will include a copy of their drivers license and social security card (for each borrower, if more than one).

The first time borrower must be able to provide proof of income that will include pay stubs for the last month. The borrower must also realize that it is not uncommon for the underwriter to request updated information and documentation in the days preceding the anticipated close of escrow date.

Not only will the borrower have to produce current employment records but tax returns for the most recent two years, as well...to include ALL W2's and 1099's for the prior tax years.

Two months worth of ALL bank statements will also be needed. Make sure you include your IRA and 401 statements as well as any CD's and saving accounts. This is not the time to black out account numbers or bank branch info - this is documentation that will be verified.

STAY CALM

Assuming the first time homebuyer is successful at submitting all of the requested documentation right away, it does not mean that the borrower is off the hook. The loan package, with all of your supporting documentation as well as the appraisal and possibly even termite or maintenance inspection reports are closely reviewed. The analogy of the underwriter analyzing your hemorrhoids with a microscope are often floated in conversation.

It is NOT uncommon for the underwriter to request additional documentation. This is the point when many purchasers will start to loose their composure. The process is getting down to crunch time and the buyer is being asked for something that has already been produced, or the buyer can't understand why they would ever want to see something that appears to be totally irrelevant...say 10 year old divorce papers, or a child support award...anything. It's all possible.

It is imperative that the new home buyer maintain their cool and accept the fact that they have been reduced to the role of a circus tiger trained to jump through burning hoops of fire. Just do it. Don't argue. Don't justify. Don't make excuses. Remember the old Nike commercials - "Just Do It".

WHAT NOT TO DO

Now this should be understood without any comment here - but maybe the seasoned real estate agent or loan officer just got so tired of sharing this information that they just naturally assume everyone and their brother knows this...DON'T MAKE ANY MAJOR PURCHASES UNTIL YOU CLOSE ESCROW - PERIOD!

I hate thinking of the Hemet - San Jacinto, CA real estate transactions that went sideways and didn't close because some happy-go-lucky buyer felt sooooo good that they were buying their first home they went out and bought a house full of new furniture, using some easy payment plan...many times with no payments due for a year. Maybe they bought a new car or they start opening new lines of credit - you know 2 or 3 new credit cards. . My favorite is when a first time wanna-be homebuyer quits their job and starts their own business. That's always a classic - remember more than likely the underwriter will want to see updated pay stubs at the end of escrow - at the very least they will be making telephone calls to the employer.

The reason why is very simple. The loan the first time buyer is obtaining was calculated on a debt to income ratio, among other important factors. When debt is increased it throws off the entire ratio. Even if the borrower would qualify for a similar loan with the higher ratio - more often than not they don't qualify for the loan that is being processed. And no, they do not just re-adjust the terms. This deal is now scrapped and more often than not the first time buyer has just forfeited their earnest money deposit.

This has all been said before. In today's economic climate these guidelines are perhaps even more important than ever before since the lenders appear to be over analyzing just about everything. So please prepare yourself ahead of time, be prepared for bumps in the road and don't don anything of a financial nature until after you close your escrow.

Today more people are trying to make the most of the homes they have...and that means remodeling.

Well here is a new video that just started it's circulation on some unusual home improvements...I hope you enjoy this as much as I did...My favorite is the Windows Window...the funnest...either the toilet paper or the light switch.  What do you think?

10 Funny Home Improvement Real Estate Ideas - Watch more funny videos here

It is true that the Active Listings in the MLS are dominated by Short Sales listings these days and on the surface they appear to be some really great deals. However, just like your Highs School Prom Queen, looks can be deceiving (my apologies to all the H.S. Prom Queens who read this...and their Kings...and the rest of the Court, as well).

Short Sale homes are typically are a better buying decision for an investor looking for investment property than for a first time homebuyer. It still continues to amaze me when a first time homebuyer that is in a rush to move will ask me if I know "How to Buy a Short Sale House for Sale in Hemet?"

Short Sale homes typically will be occupied by the owner - but not always. Today, more investors are trying to liquidate their investment properties through the Short Sale process.

WHAT DOES SHORT SALE MEAN?

Before I can educate a first time homebuyer I must first make sure that they truly understand the meaning of the term that is tossed about so casually these days so that they understand what is a short sale.

I offer a short sale definition that simply lets the prospective buyer know that the seller owes more on their mortgage than the home is worth and in order to sell it, the current owner needs to obtain permission from the lender - often a bank.

I'll elaborate, when questioned further that there is an entire short sale check list that each lender has that is unique to them. So what Countrywide, Bank of America, Wells Fargo, One West Bank or USAA expect from short sale REALTORS® is completely different from one another. There is no magic bullet that can speed up the short sale time line or give anyone a special passage to buy a short sale home.

SHORT SALE REQUIREMENTS

As previously stated, each bank will have it's own unique requirements for working with them to liquidate a short sale mortgage.

One of the universal tasks that a specialist in short sale realestate must address is the hardship letter that must be prepared documenting why the sellers unique circumstances should be considered for leniency in the forgiveness of what may be a huge amount of debt. To complete the short sale package, the hardship letter must not only tell the story of woe, but must document the circumstances with pay-stubs, bank statements, tax returns, medical records and anything else that can document the homeowners situation. It is necessary to ‘un-qualify' for the loan and PROVE that the homebuyer CANNOT afford the current mortgage. Loss of equity doesn't cut it.

Many lenders will provide the short sale realty company with a complete sample short sale package to improve the chances of getting the short sale package approved.

HOW LONG WILL IT TAKE?

This is perhaps the biggest reason I try my hardest to discourage first time homebuyers, who have or want to move soon, from getting involved in buying a short sale and why I'll do almost anything if it means avoiding a short sale.

The timeline can be very long - typically in excess of two months. When an offer is made by the buyer and their real estate agent, the listing real estate agent must now complete their "short sale package" with their hardship letter and all of the supporting documentation, which should include some preliminary title work to show any other liens that may be on the property as well as the contract that needs to be in line with market value of the short sale house.

On the receiving side the negotiator for the bank receives the package - but typically won't even take a look at the contract until close to the date when the bank is scheduled to take the home back, through the foreclosure process. You see, these bank negotiators are over-worked. They have a very heavy caseload and cannot spend a lot of time on any one file. The other consideration is they pretty much all work on some sort of bonus program - so the only files they are really going to get deeply involved in are the ones where they believe they will be able to close the deal and earn that bonus before the bank takes the home back in foreclosure and moves it to the REO department for liquidation...or worse sold as part of a bulk sale to short sale bank investors with a pool of other short sales that the bank chose not to negotiate.

The Short Sale process time line can move quickly once in the hands of a competent bank negotiator. So quickly that it is not uncommon for the bank to accept an offer and give the buyer 10 days to close escrow. So the buyer has to have their financing in place, which is why short sales are great investment vehicles for bank short sale investors but for the first time homebuyer who typically does not have a stash of cash and must rely on traditional financing methods which will require a decent credit score, a down payment and closing costs...not to mention some funds in reserve for any rehab work that may need to be done.

WHAT ARE THE CHANCES OF GETTING MY SHORT SALE PROPERTY?

There are those clients who just won't take no for an answer and God Bless them. After I painstakingly go through the details of the process, I am still asked about their odds of getting into a short sale property.

I'll make one last effort to enlighten them and ask the first time homebuyer if they understand what the short sale requirements are and if they are ready to go down the emotional roller coaster ride that will take two to three months...knowing that the statistics are against us. More often I'll get a fairly complete recap along with a, "but we just love this house, and it's in the neighborhood that we both love. Can't we just try?"

At this point, I say of course we can...as I dial the phone and ask one of my buyer agents to meet us back in the office...

Real estate sales in the Hemet - San Jacinto Valley, CA in the South West Riverside County region of the Inland Empire in Southern California has remained flat for the last couple of weeks.

The Median List price continues to hover around $136,000 while the average is somewhat off based on a couple of very expensive properties - that are anything but typical for this local market. Many of the sales are bank owned REO Listings and most of the Active Listings are Short Sales.

Here is a brief summary that is the cover page to the 13 page detailed market report that anyone can sign up, for free and have delivered to their email box every week - tracking all of the important numbers pertaining to either the Hemet or San Jacinto real estate market...and yes, there is a difference and it may not be what you expect.

So please visit JohnOcchi.Com and sign up for the market report, on the home page of my website.

Here is another sample of some interesting data that can be found in the free market report that can be sent to you each week, for free...