Hemet, CA

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...

The California Association of REALTORS (C.A.R.) is holding it's annual EXPO in San Jose this year and speaking at the EXPO Luncheon this afternoon is the C.A.R. Chief Economist, Leslie Appleton-Young.

Since I am not there, I am depending on industry insider, Inman News to keep me up to date. Considering the luncheon was not scheduled to end until 1:30 this afternoon and I received my email update at 1:05 p.m., I'm guessing this is pretty current news.

Admittedly the C.A.R. has an agenda to turn lemons into lemonade to support its declining membership. So the projections for 2010 are of course optimistic and I am sure will be quoted by the mainstream press throughout the next news cycle and a source for future quotes and sound bites for some time to come.

I'm not going to bore you with those projections because they are just that PROJECTIONS that have a caveat. According to Inman News, Leslie Appleton-Young said that, "The wild cards for 2010 include foreclosures, loan resets, the labor market, the California budget crises and the actions of the federal government."

SO, WHAT ARE THE ODDS?

So lets see...if there aren't as many foreclosures next year, I guess the market will be better. As long as interest rates stay low, then again, the market will be just peaches and cream.

If every dead beat (I'm being fascias - don't get mad at me) out there on unemployment goes out and gets a job then I guess we can expect the housing market to be better as well. Here is a blog article I reposted: The Effect Of Unemployment Upon Housing For 2010 that is right on the money.

As far as the California Budget Crises...well that's not going to fix itself with the politicians we have collecting paychecks in Sacramento. Does anyone know that meg Whitman of eBay fame has announced her candidacy for Governor? I think that will be great - we can get government moving again bases on the highest bid...or maybe someone will just elect for the ‘buy it now' feature of our new world order? But this is yet another blog to write.

And then my favorite ‘wildcard' that will have a role in determining the favorable projections of the California Housing Market next year is the Federal Government. YIKES - she sure got that right in labeling those boys and girls in Washington right by calling them WILDCARDS!

WHAT ELSE MIGHT HAVE AN IMPACT?

I for one think that one of the biggest and yet most silent factors that have anything to do with our American economy - to include our housing crises has to do with foreign investors who have been buying up our debt pretty regularly. Does anyone know what will happen if the world - or lets just say China - STOPS buying our debt?

I do believe there is "New World Order" shaping up - but unfortunately the wars, terrorist acts and skirmishes that draw the headlines and feeds the news frenzy is not where we have our real changes taking place. Rather I believe it is economic. Now I am not an economist and not pretend to understand the deep mechanics of any of these theories bouncing around - but I was taught many years ago that "He who controls the Gold sets the rules" Unfortunately, there is not much Gold left here for us to control and this is why we are slipping away in our status of the world leader

2010 - FROM MY POINT OF VIEW

Well since I've done such a good job of discounting what I read, I might as well put my neck on the line and share my own personal thoughts. Now as a disclaimer, I can't speak as a local expert for the entire national real estate market...or even the entire California real estate scene. What I do claim to be a local expert in is the section of the Inland Empire Region of Southern California in South West Riverside County that I live and work in - the Hemet - San Jacinto Valley, CA.

Our real estate market has traditionally been one of the lowest price points in all of Southern California. As a result, we probably had more than our share of sub-prime loans buying up the new construction from earlier in this decade. As a result, I believe many of the homes that will ultimately be foreclosed on - already have been - in the Hemet San Jacinto Valley, CA.. Not to say that we still don't have a huge inventory of homes that will come on the market in the next year as bank owned homes for sale, commonly referred to in the undustry as REO.

My personal belief is that we have not seen the bottom of the market. We have seen a steady decline in values for the past two years now Only recently have we seen the market flatten out and even inch slightly higher with each new listing that comes on the market as the sellers hold out for their asking price.

I believe we will possibly see an increase in home values of a very small degree, further fueling the misconception that the housing market is on the rebound. In August, I wrote The Next Wave of Bad Loans - Option Arms which very clearly spells out a lot of problems in our future for the next few years...unless of course the great WILDCARD in Washington decides everyone should just be given their house (gosh, I wish I bought a bigger house now) then we won't have to worry about the resetting of the Option Arms.

The other serious issue facing the housing market today is the ‘strategic default', which I covered when I wrote "strategic defaults - whoda thunk?" the end of last month. This is so serious that I believe it should carry the same weight as our fearless leaders in Sacramento and Washington and move this up to full WILDCARD status.

Once the market finishes flattening or even showing some weak signs of recovery there will no doubt be another race to the bottom of the market - as all of the loan modifications and short sales in the world won't be able to save all of the homes that are going to change hands in the next 3 to 5 years as a distressed property. We still have a serious free fall ahead of us.

Just telling you the way I see it from where I sit...just one REALTORS® opinion...

Whats Yours?

As a Hemet - San Jacinto Valley CA REALTOR®, I have the opportunity to meet all kinds of people - many are looking for ways to jump into the current real estate market as investors...wanting to buy at the bottom of the market.

My personal belief is we have beenseeing properties that can be purchased and rented out for a positive cash flow. The debate rages on if we have 'bottomed out' yet or not. The simple truth is every home for sale in the Hemet - San Jacinto Valley today, in October 2009, is priced below the cost of construction. We still have great newer homes being offered in the $60 a square foot range - plus and minus.

I've sid it before and I'll say it again - this will most likely be the best time in your lifetime to buy real estate as an investment.

For those who are looking to make the leap into a full fledged real estate investment, I caution them and yet encourage them simultaneously. There are lessons to be learned!

1. Don't EVER believe it is as easy as it appears on TV! The multiple TV shows that air everyday showing how easy it is to find a great property and re-condition it for sale and make a huge profit are just that - TV shows!

They never show how difficult it is to find the "right" property, even though many are "out there", they still require skill, time and effort in locating and identifying.

The other issue is the industry relationships that have to be built in order to make sure a project comes in at or under budget. There are numerous horror stories that circulate about contractors, budgets and time lines and none of them are pleasant.

Investing is hard work, yet it is work that can be very profitable if done right...did I mention very profitable?

2. My Father used to say, "Slowly but Surely". This drove me nuts because I always wanted it all right then and there - after all I was raised in the generation of instant gratification, wasn't I?

When getting into real estate investing, it is important that the new investor learn as much about this industry as possible. Take baby steps with minimal risk before you go jumping into large riskier projects. Train yourself as an Olympic athlete would train for their event. Remember that a single mistake can be very costly and ruin an entire project and possibly your motivation for future investments.

A great first investment might be a home you can live in while doing the rehab work, that way you can minimize your exposure and take your time doing the project right. Perhaps the single biggest mistake that novice investors will ever make is underestimating the carrying costs of a project - not only during the rehab period but during the vacancy - whether the property is a rental of a flip for some quick cash - if no one id biting at your apple, you will still have to make the payments plus pay the insurance and taxes on the property.

3. Flipping equals Cash Flow - Buy & Hold equals Wealth The true path to wealth is in holding real estate. Buying an older home and fixing it up to sell for a profit sound like a fun project and easy job... but it is usually neither. To flip a house you need to have industry knowledge about the market as well as construction knowledge and skills. Flipping requires a pool of liquid cash to back up any contingencies in addition to the hard work that is put into every project.

Flipping properties in the Hemet - San Jacinto Valley and elsewhere will have tax consequences as you consider the capital gains taxes with everything else.

On the other hand, if you buy rental property, it will be nice to get a check in the mail every month. Once the property builds some equity and rents go up, it will be very nice to have a check with positive cash flow every month, in addition to tax benefits that will help you earn even more money from your investment - of course you need to check with your tax professional to see just how that will work, as I am only a humble REALTOR®, licensed by the State of California to assist you in buying and selling your real estate - not offering tax advise.


4. Fail to Plan and Plan to Fail- That's right Real Estate Investing in the Hemet - San Jacinto Valley, CA or anywhere else in southwest Riverside County of the Inland Empire requires a plan...a strategy. Real Estate investing should never be considered a "by-the-seat-of-your-pants" type of operation. There is too much at stake and too many things that can go wrong.

When investing in real estate you should first determine what type of property you want to be involved with. Are you in the property for the long haul or a quick flip - either way, go into the project with an exit strategy. Know about the holding costs, and over allow by at least twice what you think you will need in reserves to carry the property until it is either rented or sold.

If you are planning on holding the property, then be sure to conservatively analyze the cash flow - including all of your tax benefits. There are a number of "formulas" that successful investors develop to access a particular property - figure out what it is that needs to be figured out. Write everything down and anticipate the absolute worst-case scenario and then figure out how you'll get out of that predicament.

Once you have developed your own successful "formula", stick with it. The key to being a successful real estate investor is not just having a great plan...rather it is in the execution of the great plan.


5. Paralysis by Analysis - As important as it is to have a formula for determining which properties are right for you, you have to have the motivation to get off the fence and take action, once you find the right property.

In just about every contract to purchase real estate, there are always escape clauses - whether they be inspection clauses or the ability to obtain favorable financing - there is always a way out.

In my opinion, it is always best to tie up a property with a contract while you do your own due diligence than it is to find the right deal and then work out every conceivable angle, only to want to move forward but find out that another investor was dead on your heels and scooped up the rights to the property before you exercised your right to make an offer.

6. Play Devils Advocate - Once you believe you have a solid deal then go ahead and play a round or tow of Devils Advocate and try to talk yourself out of the deal. Explore everything that can possibly go wrong - yes, I know you are hoping for a smooth transaction, but prepare for the worst-case scenario. Whatever you do, do not get emotionally attached to a property - as that could be the kiss of doom to your project.

If after looking at all of the negative aspects of the deal it still looks like you should be able to turn a profit, then go for it. On the other hand, if it looks like there is the POSSIBILITY that you could lose money - then simply walk away.

7. Real Estate Investing is a TEAM Sport- When you are investing in the Hemet - San Jacinto real estate market, do not try and do it on your own. First and foremost you need a tax professional to help devise your plan, so that your investments reap the maximum profit potential from you and minimize your tax liability.

Another integral player on your team is your REALTOR®. Know that there are many good REALTORS® as well as many bad agents. Meet several - interview and find the ONE who you can communicate with and one who knows how to find investment quality properties for your consideration.

A good REALTOR® is worth their weight in gold to a successful real estate investor, so let them do their thing and earn a fair commission for doing it. What ever you do, do not try and squeeze your REALTOR on commission - even if you are successful in the battle, you will definitely lose that war. Remember, every REALTOR® has multiple clients and if they are good working with investors, they have many investor clients. So, when the next great deal comes along, you certainly don't want to be the last call the agent makes...you want to be their first call.


Just remember that real estate is not as easy as it appears on the TV shows, late night infomercials or in the books at Barnes and Noble. If you are a novice investor, make sure you have a good idea of what you are doing before you do it. Talk to as many established investors as you can and form your team of trusted advisers early. Follow these simple tips and you should be on your way to scoring your first real estate investment in the Hemet - San Jacinto CA Valley.

Now Have a Blessed Day,

John Occhi, ePro, Hemet - San Jacinto Valley, CA REALTOR®

This blog and the contents written here is the intellectual property of John Occhi, Hemet - San Jacinto California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0. Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.