John Occhi Hemet CA Real Estate

Wow, what an amazing concept. Is it possible that this great nation of ours could fall as easily as the Berlin Wall and the Soviet Block did? Certainly the former USSR never thought they would crumble into oblivion as quickly as they did, did they?

How about the Roman Empire? Everyone pretty much thought they were indestructible, didn’t they? And look what happened when they started pampering themselves and living large…that’s right they ceased to exist. And so the story goes with every other major power that history has recorded throughout the history of mankind.

So why is it that the United States of America believes we are so indestructible?

First, don’t get me wrong – I am born and bred American. Served 10 years in the US Army as a Cold War Warrior of the 1970’s – serving 6 years near the East-West border, poised for action waiting for “the balloon to go up”. I love this country – heck the only tattoo I got was when I was 17 and first joined the army – yes it is a very patriotic tattoo. So, please don’t think I am an outsider advocating self destruction or any other acts of terrorism, because that just ain’t me! I refuse to bury my head in the sand or be afraid to speak my mind in this FREE COUNTRY (While it is Still Free) All I am doing is expressing my own personal opinion as I am still protected by the First Amendment…or has Homeland Security and the Patriot Act trumped this right yet?

Neither am I a student of Economics or Political Science – I am just a REALTOR trying to survive like everyone else. What I can tell you that what I see from where I sit is not a pretty picture. I still think that most of my fellow countrymen are in total denial and have absolutely no idea how this is going to shake down and personally affect them. Certainly those who have been able to hang on to their homes so far are proud of that – yet still they worry.

WORST CASE SCENARIO

Unless we really get our act together and solve this problem, as I know America can; then I do believe that the end of this once great nation, as we know it will soon be revealed. Now I am not going to pretend that I understand the current Economic Bailout – not do I even know anyone who really does. Sure, like everyone else, I have my opinions – but what I am basing them on – sound bites, headlines and video clips; just like everyone else.

What I do believe is that the ‘Powers to Be” have two choices – one of them is self serving and the other is for the best interest of everyone I know. This is scary, because typically these ‘Powers’ – whoever they are, hiding behind the scenes pulling the strings of the front men (and women) politicians, are going to look out for their own selfish interests.

What will happen if there is a natural disaster right now? Say a Katrina times five, or a fire that sweeps across 10 states, maybe a 9.0 earthquake devastating an entire region or God forbid a terrorist attach that dwarfs 9/11 just to send President Bush out the way he came in?

Is it possible that we are in the last days of America as we know it? What will happen if there is a total economic collapse? Will the forces of Homeland Security become the Gestapo of our new president? Will we as Americans accept that this is our lot in life and we have to endure for the ‘greater good’ or will we revolt and overthrow the government? Would those ‘Powers’ allow a full our revolution or would they take steps to minimize the losses and divide the ‘Former USA’ into a series of regional countries with a loose connection to one another?

I’ve had conversations similar to this with several of my clients and the consensus is always the same – that anything right now is possible. The consensus is also that there are two place to put money today – gold coins and real estate. My guess the makers of high end safes and vaults are doing a good business these days.

All I know is that life as we know it today scares the dickens out of me.

WATCH THE VIDEO

Click on the link above for a very fast passed video posted on YouTube that reveals exactly what some of the problems are. I would highly recommend you take a few minutes and watch.

I just finished watching a fast paced 10 minute video on the topic of the current economic condition our country is in.

Not only did it educate me and make me think, it made me MAD!

Check it out

Please leave your comments and feel free to repost this anywhere you like.

What Did Cheech and Chong Teach Us About the Current Housing Market?

Those of us old enough to remember the comedy duo of the 1970's, Cheech and Chong will no doubt remember the bit they did about dog droppings. As I ponder the routine, I can still here it in the echoes and deep recesses of my mind.

The act started with one character of authority asking the other what something is on the ground; to which the other grunted and responded that it looks like dog sh*t. The leader then instructed the subordinate to touch, smell and ultimately taste the substance, to which the conclusion was always that it's nothing more than dog sh*t. OK, Maybe it was a bit sick, looking back - you had to be there - and yes it was rolling on the floor funny!

As funny as the routine was, what really made it hilarious was the punch line, when the authority figure declares, "It's a good thing we didn't step in it!"

Well, who ever thought that Cheech and Chong could have had more sense than has been displayed by the economic powers that have us in the mess we are in now?

How many years ago was the writing on the wall that is only now being read. Wasn't good enough, was it?

How many banks had to collapse before we realized we had a problem?

How many homeowners had to have their credit and lives ruined by losing their homes before it affected someone we knew and it became a personal problem?

It's unfortunate that there really isn't too much that be doe at this point - no matter what course of action is taken the next few years promise to be ugly. I imagine we are going to see a society even more divided between the ‘Haves' and ‘Have Not's'

The bailout plans are just going too fast for my blood - heck we are talking about hundreds of trillions of dollars and decisions being made in a week or two that will have a major impact on this nation for at least a generation. We took more time to go to war. Heck we take more time trying to figure out the realignment of a stupid road than we are the financial future of what was once the world's most powerful economy. Boy, did we screw that up, or what?

I think a big problem is that most of us can't get our heads around a number like a TRILLION, let alone HUNDREDS of TRILLIONS. Several months ago when I changed companies to a firm that claims to have sold over One Billion Dollars in REO Sales I posted a blog article about what a BILLION is. Some of the highlights say that

A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were
living in the Stone Age.

Now realize that a TRILLION is a THOUSAND BILLIONS and a BILLION is THOUSAND MILLIONS. Most of us can imagine a MILLION which is a THOUSAND THOUSANDS.

Call me a simpleton if you must, but I can't imagine what a TRILLION of anything would look like.

Unlike our heroes fro Cheech and Chong, I guess we really stepped in it this time, didn't we?

I was very disturbed when I red an article earlier this month that my local market had dropped in value by a full 9% in just one month.

Hello, I live here and work this market full time - every day and yes, I have seen a drop month after month - it has never been 9% in a single month, despite what the local newspaper, "The Press Enterprise" reporter Leslie Berkman reported on August 30^th, 2008.

Now, I agree with most of what the article reports - but come on, lets be responsible and not add fuel to the fire. I agree with Ms. Berkman when she said, "Economists and real estate insiders agree that the biggest price drops are behind in Inland Southern California. But they say prices could fall another 15 percent or so, bottoming in mid- to late 2009 or 2010."

When asked, I have often voiced my opinion that the market had another 10% left to bottom in the next 12 months which will probably be followed by still another 5% decrease in the following 12 months before we actually bottom out and start an incline for a couple of additional years before the California public gets tired of waiting and starts a new buying frenzy fueled by the principals of Supply and Demand. My guess is the population of California will be significantly higher in 4 or 5 years than it is today.

I do not believe it is in anyone's best interest to wait on the market. First off, we won't actually know we hit the very bottom for at least 3 months after it happens as real estate value is all about trends and trends take time to reveal themselves.

If I was in the market to purchase real estate I would be more concerned with rising interest rates than I would dropping prices. The way I see it, anyone who buys a home now and plans on living in it for at least 5 years cannot get burned - impossible. The reason being is many newer homes are selling for $60 to $65 a square foot today - about half the cost of building a new home. Hello - can anyone say bargain???

If the interest rates climb to 9% or 10% like they did in the 1990's...or how about 18% to 21% like they did in the 1980's, then the price will be an point if insignificance. For example a 30 year fixed loan at 6% will have a $599.95 monthly principal and interest (P&I) loan payment. Increase that by just 1% and the monthly payment is increased by over $65 a month. So a $250,000 mortgage today at 6% would have P&I payment of $1498.88. At 10% that payment would jump to $2,193.93; at 18% that same home would now require a $3,767.71 monthly mortgage payment.

PERSONAL EXPERIENCE

And yes, 18% really did happen in my lifetime. When I was in the Army, returning from a 6 year tour in Europe, we had a democrat president in 1980. I had a down payment on a home for around $50,000 at the time but ended up losing my deposit (which I could not afford) when the rates jumped to 21%. This was in the days before Rate Locks became common.

So, my point is that interest rates are much more significant to the buyer than the actual purchase price - especially since prices are so low right now.

To buy a home today makes pretty good sense to a lot of people. The California Association of REALTORS® reported that 177% more Californians bought a home in July 2008 over July 2007. In Hemet, 74 homes closed escrow in August 2007 and then this year in August, 208 escrows closed, reflecting a 284% increase in the number of transactions for over $100,000 less than the homes were just a year earlier. In August 2007 the Median price of a home that sold in Hemet, California was down to $267,000. In August of 2007, the Median price of a home in Hemet, CA was only $159,900 - approximately a 41% drop in a single year.

Here is some data that I collected using the Alliance MLS - which is a compilation of the local SoCalMLS that is used by the local Hemet - San Jacinto Association of REALTORS (HSJAOR) and the Matrix MLS used by most other REALTOR boards in South West Riverside County and throughout the Inland Empire region of Southern California.

The downside to this compilation is that there are duplicate entries as some REALTORS will list the same home in both MLS's so that they can gain maximum exposure It is also very difficult to search and sort by all but the very basic search criteria.

SOLD HOMES BY PERIOD

PERIOD	SOLD	MEDIAN $	Sold $ From	Sold $ To
Sep-08*	121	$145,000	$49,900	$99,725
Sep-07*	56	$263,990	$99,725	$777,000
Aug-08	208	$159,900	$30,000	$450,000
Aug-07	74	$268,000	$81,000	$565,000
Jul-08	172	$165,500	$41,500	$624,000
Jul-07	118	$281,000	$128,000	$739,000
Jun-08	177	$179,500	$49,900	$560,000
Jun-07	93	$287,500	$125,000	$720,000

This chart shows how many homes actually closed escrow each month, the Median Price for each months well as the range of sales prices for closed transactions in Hemet, CA.

LISTINGS BY PERIOD

PERIOD	NEW	MEDIAN $	List $ From	LIST $ TO	Cur ACT	Cur SOLD	Cur PEND
Sep-08*	253		$45,000	$1,100,000	223	2	19
Sep-07*	287	$267,500	$41,500	$1,149,000	12	69	1
Aug-08	389	$193,000	$37,000	$750,000	258	12	91
Aug-07	416	$297,000	$800	$749,000	10	87	2
Jul-08	423	$224,900	$49,900	$895,000	205	76	92
Jul-07	443	$299,900	$68,250	$969,000	7	95	0
Jun-08	388	$199,900	$65,000	$419,000	169	99	65
Jun-07	451	$225,000	$2,000	$1,870,000	5	87	1

* September 1-21 Only - Data gathered 9/21/2008.

This chart is similar, covering the identical periods but instead of looking at the activity of closed files this chart examines how many properties were listed each month and again looking at the total number of new listings, the Median Price and the List Price homes came on the market with

The difference is this chart looks to see what has happened with the properties by examining how many are still Active, how many Closed escrow and how many (if any) are currently in the Pending status. I find it amazing that there are as many active listings still on the books from over a year ago. My guess is that right offer could get a ‘smokin' deal on one of these properties, as the seller wants out.

Collectively these charts point out the trend of a year ago as we were early in the rapidly declining market and how it continue today. These charts show that there are some great opportunities in the current real estate market and with interest rates still in the realm of historically low, makes this an excellent time for the investor, first time or move up home buyer to make their move and secure their financial futures with real estate today.

Blessings to all who read,

John Occhi, REALTOR®
Century 21 Crest - CrestREO
Over $1 Billion in Closed REO Sales
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Servicing THE REO Needs of Asset Managers, Servicers, Banks and Lending Institutions in the Hemet - San Jacinto Valley, Temecula, Murrieta, Winchester, Wildomar, Menifee, Sun Valley, Perris, Moreno Valley, Romoland, Homeland, Nuevo, Banning, Beaumont, Cherry Valley, Yucaipa, Redlands, Mentone, Loma Linda and throughout South West Riverside County and The Pass Areas of The Inland Empire in Southern California. If you are a buyer, investor, first time home buyer or are just interested in REO real estate, please contact us at the above phone number.

When a property is taken back by a lender through the foreclosure process they not only have to deal with the loss of the monthly payments for the better part of the last year – or n some cases even longer. They not only have to provide the financial resources for the legal process to take the home back. In fact the lenders losses are just starting to add up and the real money could be forthcoming.

Once the property has been secured and back “in the hands’ of the lender / owner the process begins to minimize the loss incurred. Of course the best way to minimize any future expense is to sell the home quickly.

The local South West Riverside County in Southern California is experiencing a rapidly declining market and no area is hit harder than my local Hemet – San Jacinto Valley. When I perform a BPO I always try to emphasize a 30 day price as the most realistic. I believe that if a REO property is priced to sell for the maximum return at a 90 to 120 day price then the gains that are hoped to be realized will be eaten up with a decline in value that has averaged at least 3% per month since the beginning of the year.

In addition to the decline in market value, the seller must take the season of the year into consideration. Here it is September 21^st as I write this article and the market has already dramatically slowed down over the past several months.

The lender will have to spend hard earned money in necessary sales cost and write it off as the cost of doing business. Money is spent on the following:

Occupancy Check – A report is generated informing the owner if the property is still occupied or if it is vacant.

Winterization – An expense that may not seem to be necessary in the Hemet – San Jacinto Valley or elsewhere in the South West Riverside County region of the Inland Empire, but all it takes is one cold night to cause an old pipe to burst – and that can create major havoc that the REO REALTOR® will be responsible for if they advised the Asset Manager that this task would not be necessary.

Maintenance – When a property is secured, there are often tasks that must be accomplished to ensure that the property is both safe and secure, to local standards. Once the REO property has been cleaned and secured it must be maintained until it is sold and escrow closes. Ongoing maintenance will include such tasks as monthly lawn care, pool maintenance and general supervision and maintenance of the property.

Valuation / BPOs – As far as I can tell, every lender / owner will have a full appraisal performed on each property they take back through the foreclosure process and now carry on their books as REO. If there is more than a 10% discrepancy between the REALTORS opinion and the opinion of the Appraiser than the Asset Manager will typically order a 2^nd BPO.

Listing Price – This may be one of the biggest expenses of the Owner / Investor in the sale of the REO. If a property is under-priced then the Owner will not receive the most they could have for the asset. On the other hand if the property is overpriced and sits on the market while the competition sells all around it – they will loses additional funds as the REO Asset ages in the MLS, often making it undesirable to agents in addition to the loss incurred by depreciation in this rapidly declining market.

Blessings to all who read,

John Occhi, REALTOR®
Century 21 Crest – CrestREO
Over $1 Billion in Closed REO Sales
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Servicing THE REO Needs of Asset Managers, Servicers, Banks and Lending Institutions in the Hemet - San Jacinto Valley, Temecula, Murrieta, Winchester, Wildomar, Menifee, Sun Valley, Perris, Moreno Valley, Romoland, Homeland, Nuevo, Banning, Beaumont, Cherry Valley, Yucaipa, Redlands, Mentone, Loma Linda and throughout South West Riverside County and The Pass Areas of The Inland Empire in Southern California. If you are a buyer, investor, first time home buyer or are just interested in REO real estate, please contact us at the above phone number.

This article is part of a series based on my own experience and the lessons taught by the prestigious Five Star Institute in their “REO from A To Z” class that is necessary in order to obtain the coveted Five Star Designation, by far the most respected professional designation a REALTOR can earn in the specialty niche of listing and selling REO properties.