Thursday, November 02, 2006

What Happens to the Hemet Real Estate Market at This Time of Year

Today I kick started a new marketing campaign. I have been contemplating for some time what my next move would be in Real Estate finally decided to focus on the “EXPIRED” market.

These are the Hemet homes that have previously been listed for sale with another REALTOR, belonging to my MLS. I should clarify this, not all real estate agents who do business in Hemet belong to the local Hemet-San Jacinto Board of Realtors. If an agent from outside this area gets a listing, for whatever reason, they can still list it in our MLS – this is called a ‘Reciprocal Listing’ in Realtor lingo.

The problem with employing an agent from outside the market area is 1) they are not as familiar with the local market and conditions as a local; and 2) They do not have a network of local Realtors to tell about their listing and entice to preview and show the property.

In any event, before I get too sidetracked, let’s bring the discussion back to the current condition of the Hemet Market. We can all agree that times are slow and many are thinking that November and December are traditionally the slow times of the year anyway, so why bother listing a home now, why not just wait until Spring, when everything is fresh and new again…and of course the market will be ready to take off then, right?

Well, every year I publish a short piece on why the holiday season is a great time to list and sell your home. I thought I would add it here, providing for a fun and informative read…but I must disclose that the following is not an original writing of mine and to be honest, I have no idea where it comes from to give the credit to.

So, please consider…12 Reasons to List During the Holidays

1) There's less competition for buyers

2) Winter prospects are more serious during the holidays

3) Your home looks better during the holidays

4) One of the highest percentages of "Listings Sold" to "ListingsTaken" occurs during this time of year

5) You may receive more money for your home now because you have less competition

6) Throughout the holiday season you may restrict showings during your personal family events

7) Buyers have more time to look at homes during holidays, especially during vacations

8) January is traditionally the biggest transfer month - and you must be on the market to capture that

9) By selling now you can have a delayed closing or extended occupancy until the beginning of the following year, if you want it.

10) When you sell during the winter you have an opportunity to buy during the spring, when many homes are on the market

11) You may have fewer actual showings, but more qualified and motivated prospects look for homes during the winter

12) Corporate transferees, who need to buy a home now, can't/won'twait until spring

Wednesday, November 01, 2006

How to Price Your Hemet Home so it will Sell

With all of the discussion about the Real Estate market, I feel that many people are being foolish when it comes time to consider if they should sell their home or not. Let’s assume for this discussion that we can all agree that the market has turned flat and in some isolated areas, values have started to slip. So the question remains, “Do I get out now?” or “Do I ride the storm out and see what happens in the next couple of years?

Of course, there will always be sellers who have to sell now, regardless of market conditions. Several examples of these sellers are those who are being transferred out of the area; those who have gone (or are going through) a traumatic life change, i.e. divorce, death, illness, and even the kids going off to college; and then there are those that are financially strapped – perhaps they got into their existing home with some exotic mortgage that did not live up to its expectations.

In any event, this article is not written for the above individuals specifically, although every thing I will discuss here is sound advice and should be considered by everyone who is even remotely thinking of selling their home.

If you read my article from yesterday, you’ll see that I identified a large number of homes for sale in the East Hemet zip code of 92544 – 291 to be precise. When you consider that only 40 homes closed escrow in all of October 2006 it becomes obvious that there is an existing inventory that will take more than7 months to sell, if no new home came on the market.


So, if you want (or need) to sell your Hemet Real Estate, lets first start with some questions to ask yourself. They may include:

What condition is the real estate market in my neighborhood? How many homes sold this year compared to last year? What is the current inventory? Are prices going up, staying the same or going down?

Do I need a Real Estate Agent, or should I do it myself?

Am I selecting a Real Estate Agent based on the services he (or she) will provide, or am I shopping on price for a Realtor? (see yesterdays post that shows the difference between how many homes sell, are listed and expire – broken down by commission)

Is my opinion of my homes value based on good solid comps from my neighborhood or am I on a diet of pie in the sky?

How many different homes would I be competing with in my neighborhood? What condition is mine in, compared to the competition? Am I lacking amenities? Have I over-improved my property for the neighborhood?

Since I bought my home, which improvements that I have made have actually increased the value of my home? Which improvements did I do for my own pleasure and not for the increased value?

Am I being motivated by my personal financial needs, or is my decision a sound one based on the real facts?

Does it matter what I paid for my Hemet home? Is the original purchase price going to influence my pricing strategy?

Do I have what it takes to price my home right for today’s market, and stand firm on the price?

If I sell my current Hemet property then I will have to buy a new home. Do I know how the current market will influence me when I am ready to buy? (sell first and then buy – but that’s another article)

How important are the benefits of moving now if I have to sell my home at the current market price.

Who Is the Best Hemet Realtor?

As much as I wish I could tell you I am, there really is no clear cut answer. The real question is who the best real estate agent for you is. Today’s market place has become very diverse. Not long ago, your choices were all the same, just different brands. The big national franchises dominated the real estate industry and other than a few small boutique offices all of the competition was between the mega-brokers.

With the internet and all of the tools available today, the entire process is evolving, yet it really remains the same (again another topic for another article).

My suggestion is to find a Hemet Realtor that 1) you feel comfortable working with and 2) you feel confident in their abilities. Do a gut check and run with your instincts.

The one criteria you should NEVER use for the selection process of a Realtor is what the real estate agent tells you they can sell the home for. A real estate agent NEVER has control over the market conditions. Many Realtors will ‘pitch’ their services based on an over-inflated price so they can get the ‘listing’, knowing full well they will be back in several weeks for a price reductions. A professional Realtor will always give you the facts along with candid feedback so that you can price your home to sell, within the current market.

Comparative Market Analysis

Any Hemet Real Estate agent worth their salt will prepare a 'Comprehensive Market Analysis' (CMA) that will provide you with the tools necessary to make a sound decision on setting the price of your home. Remember, the decision is all yours.

At a minimum, the CMA will look at different types of listings on the MLS. I believe the local Hemet MLS actually has 10 different classifications of listings. They all boil down to one of 3 different general classifications that need to be considered when pricing your Hemet house for sale.


Expired listings are listings that have been on the market, ran the course of the contract period and the contract has expired. These are homes that the market has rejected – typically because of price.

Lets look at the overall numbers from yesterdays article:

Overall Market - EXPIRED
Number of Listings: 41
Average Price: $427,807
Medium Price: $385,000
Total Inventory: $17,540,090
Days On Market: 134.73

Overall Market - SOLD
Number of Listings: 40
Average Price: $346,325
Medium Price: $264,500
Total Inventory: $13,853,000
Days On Market: 87.55

Big difference! These are real numbers from the Hemet MLS for single family residences, covering the period of October 2006, for zip code 92544 in East Hemet.

Notice, just about as many listings expired as sold last month (40/41) – but check out the other numbers. The difference between the Average Price is $81,412. The medium price is even more extreme - $120,500. (Read yesterday’s article for discussion on the difference between the Average Price vs. the Medium Price.)

The sad news is that the Expired listings sat on the market for over a month and a half longer (48+ days), with the seller cleaning their home every day for showings that typically did not happen – dashing their hopes of moving some time soon.

Other MLS categories that can be considered with a similar bearing on the MLS are those that have been ‘Cancelled’ and ‘Withdrawn’.


Active listings make up the greatest number of listings, as these are the homes that are currently for sale. These properties are considered to be ‘Inventory’ for all Realtors belonging to any MLS. By listing a home in the MLS, the listing agent is contractually bound to pay the selling agent a commission, as it is posted in the MLS. This is perhaps the biggest advantage to listing your home with a Realtor, because through the MLS, your Hemet real estate agent can market your home across town, across the state, across the country and even around the world. The MLS is that powerful. (Remember, buyers use a Realtor for free to help them buy their home, so the Realtors have the buyers.)

Pricing in the Active category can be misleading. It has often been referred to as a fantasy value – it is what the buyer wants to sell for and in many cases it is an over inflated value a real estate agents suggested to get the listing.

One of the best criteria you can use for examining a MLS listing is the ‘Days on Market’ (DOM). The DOM will tell you if the home has been on the market for a long time. Once the DOM exceeds the average DOM, you know without certainty there is a price or other issue.

The current single family residences stats for the Hemet MLS, for the East Hemet zip code of 92544, for looks like this:

Overall Market - ACTIVE
Number of Listings: 291
Average Price: $391,904
Medium Price: $339,900
Total Inventory: $114,044,131
Days On Market: 84.67

Compare these numbers to the SOLD summary above and you will see there is $45,579 difference, representing an approximate 13% difference in price. Even between the Medium value, there is a $75,400 disparity.

Other MLS sub-categories that will include homes that may still be sold are the ‘Back-Up’, ‘First Right of Refusal’, and ‘Hold – Do Not Show’.


Sold listings tell us the real value of the current market. Looking at the numbers tell us what price point is selling, how much inventory is available, what commission points are selling, and most important what price specific homes in specific neighborhoods are selling for.

These are the actual sales price which offers the best evidence to base the decision of where to price your home. Remember, you want to find homes as similar to yours and as close to yours as possible. This is often very easy to do in established tract home neighborhoods. However in areas like east Hemet where we have so many custom and semi-custom homes we are often left with the task of making numerous adjustments.

For example, when I prepare a CMA, some of the standard adjustments I will use to make the homes appear more similar are:

Square Footage $100 per sq foot
Lot Square Footage $2 per sq ft
Bedroom $10,000 per bedroom
Bathroom $2,500 per bathroom
Age of Home $2,000 per year difference
Pool (in ground – gunite) $20,000
Spa (in ground – gunite) $2,500
View $2,500

There is nothing concrete about these numbers. It really depends on the price range of the home and a number of different factors. The key is to be consistent when comparing the subject property (your home) to the comps.

Of course, the numbers have to be either added or subtracted, depending which side of the equation the difference is on. For example if your home is 2,000 sq ft and the comp is 2,100 sq feet then the 100 sq ft difference would be multiplied by the $100 per sq ft for a $10,000 adjustment that would have to be deducted from the comp in order to make the homes more similar.

Again, I cannot strongly emphasis enough how subjective these numbers are and how open to interpretation they are. As a Realtor, I use my professional opinion. An appraiser goes through a very similar process, but an appraiser is licensed for this specific task and lenders rely on their network of licensed and certified appraisers. Never substitute or confuse a Realtor (or self) prepared CMA with a professional appraisal.

Trends in Value in the Market

In a ‘Hot Market’, like we saw in the earlier part of this decade it was not uncommon for a Hemet home to go on the market priced above the current market value. This overpricing actually helped drive the market.

If a home were realistically valued at $340,000 in a hot market, the seller may decide they have the time for the market to catch the price, so they list it at $350,000. In theory they got top market price for their home as soon as they sold it for the higher price. It may have stayed on the market a little bit longer, but in essence what it did was help establish the higher value in the neighborhood.

Again, this is an effective technique when we are seeing double digit appreciation of our real estate, but into days market it is not recommended at all. If you were to price your home at $10,000 over the market value, it will likely sit on the MLS until it either expires or you do a reality check and lower the price. However, if you let it sit on the market at a higher price and then drop the listing price on the MLS, you will have lost valuable exposure that you may never get back again. I’ll discuss this concept in more detail shortly.

Real Estate Evaluation Principals

There are several principals that must be understood and considered when pricing your Hemet Home to sell in today’s uncertain market.


– You must know the amount you actually paid for a property. Be sure to include and significant improvements you have made since the time you purchased the Hemet home. Do Not Include equity you have pulled out of the home in a refinance o\r a 2nd mortgage. The loan amount is not relevant at all. Only include the amount you actually used to upgrade your home with a capital improvement. (This does not include maintenance –a new roof is maintenance. Any buyer expects a home to have a solid roof – so the $30,000 you spent on a new roof does not add any value.)


– This is the amount you will accept for your property. Typically it is expressed in dollars, but there have been transactions that have included other assets as well. In this case, the value has to be converted into dollars for tax and government reporting purposes.


- Depending on the specific circumstances, Value is the amount a buyer is willing to pay for a specific property.


– Assuming an ‘Arms Length Transaction’ between two entities (people) who have no relation with one another and where one does not have an advantage over the other in negotiations, an arms length transaction represents the market value of a piece of real estate. It is a value based on what similar properties have sold for and what a willing buyer will pay a willing seller.


– These are the principals that tell you it is better to have the smallest house in a neighborhood of big houses than to have the biggest house in a neighborhood of small houses. This principal addresses the effect that surrounding homes sizes have on your property. Regression will de3crease your value when you are overbuilt for a neighborhood and Progression will increase your value when you are surrounded by larger more expensive homes.


– This is the principal that addresses specific amenities. It is similar to the adjustments we made on a CMA, and often amenity adjustments are also made on a CMA. For example, two identical homes with the exception for a kitchen remodel. Same age, same square footage, and the same lot size. One house has a Formica floor and Formica counter tops. The second home has 18” ceramic tile in the kitchen and granite counter tops at a cost of $25,000. I’m not swaying because the second homeowner spent $25,000 in upgrades that the second home is worth $25,000 more. I’m sure we can all agree though, the second home is worth more than the first (again all other things, including maintenance are equal).

There are some improvements that will return dollar for dollar when the home is sold, but most will not. Yes they will typically increase the value of a home but not necessarily dollar for dollar on the amount spent on the improvement.

An important consideration is that the value is not determined by the amount invested in the amenity but rather by the value derived from it.

Let’s look at a different example. Let’s look at two of our rural home sites. Both are on an acre, on a paved road, both built the same year with the same square footage of living space and on the surface both properties appear to be worth exactly the same. Thy only difference is the well.
The first homeowner has to drill 100 feet to find drinking water at a cost of $10,000. Unfortunately for his neighbor, the second property has to go 250 feet to find an adequate water supply, at a cost of $50,000.

So, is the second property now worth $40,000 more because he had to pay that much more for his well? No, both properties are equal in value. However, had this information been available to both homeowners before they purchased and developed the land, the second vacant lot would have been worth less than the first because of the expense of the drilling to obtain a suitable drinking resource. Now that they have been developed and have like amenities, there is no adjustment for the cost of the amenity.

What Happens When a Hemet Home is Overpriced?

It is critical to price a home properly when it is first listed on the market. If a seller takes the attitude that they can put it on the market for a higher price and then reduce the price if it doesn’t sell right away is much more detrimental than any other pricing strategy.

More often than not, by the time an overpriced listing is reduced to the actual market value it will have become aged. Unlike a fine wine, aging is not good when you are trying to sell your Hemet home for top dollar.

Remember, the shopper who is looking at your home is just like you, and that’s a good thing. But stop for a moment and remember what it is like to shop for a home. Do you remember ever asking the question of how long a home has been on the market? Did you make your own conclusions when you were given a long time period? Maybe you thought you could do a little negotiating at that point… or…

Some sellers will take the attitude that ‘they don’t have to sell right now’ and that ‘they have time’. This is a disaster in the works.

In an escalating market, it may be O.K. to price a home just over the market value, knowing that the market will catch up soon and you will receive top dollar for your home (assuming it’s in top condition and you don’t mind keeping it in showing condition until the market does catch up. This strategy is a good one if you want to make absolutely certain that you squeezed every possible dime out of your property. Remember though, it only works in an escalating market – not the pre-holiday market of November 2006.

This strategy will never work if the home is dramatically over priced. No reasonable amount of time will generate a buyer for a home that is 25% overpriced. Even if an offer comes in from a buyer who falls in ‘love’ and ‘must have’ your perfect dream home, remember that there is not a lender in the world who will make that type of risky loan. Every home has to be sold twice, first to the buyer and then to his lender.

So, Why are Homes Overpriced

I am hoping that you will agree that most of what I have shared with you is very basic principals of real estate and life in general. Now that you have thought about the concept a bit, I am hoping it is as obvious to you as the nose on your face.

Let’s examine some of the reasons why sellers still overprice their home…


– This is a case of putting much more into a house than the neighborhood will ever bear. A classic example of the principal of Regression that I discussed earlier. I just sold a home that was worth around $450,000 for the house alone. However, the seller is a contractor that does custom rock work. He built am oversized rock pool and put in a plush tropical landscape complete with a wrap around deck, fire pit, BBQ, waterslide and so much more. We had an estimate of $500,000 to duplicate it from another contractor – so the house was a steal at $695,000 right? Unfortunately for my seller, it’s still only a $450,000 neighborhood and the best we could do after a year on the market was $520,000


– Often an owner will have a need or desire to raise cash and the only way they can do it is through the sale of their home. Repeat after me, “So What!” As we discussed under ‘Market Value’ a home is only worth what someone is willing to pay for it, not what you need. This often surfaces after a seller has stripped all of the equity out of the property through refinancing and then as the market flattens they try to bail, thinking the buyer and real estate agents should pay the closing costs and commissions.


– One of the elements that make Hemet so desirable is that our housing is so affordable compared to the rest of Southern California. However, when you move from Hemet to a more expensive area, do not allow the price you will pay for your new home influence the price you will ask for the Hemet home. Value is location specific


– This is a tough one. Chancesare when youboughtyourhomeit was’Market Value’, otherwise it would have been hard to get a loan. However the market does change. Imagine you are buying you home right now, at fair market value and the next year sees the bottom fall-out of the market and it takes a 10% decline in value. If you were going to sell next year, would you be able to sell for your purchase price or the fair market value?


– Pricing a home should never be a gut reaction but should be based on recent documented sales.


– Being the melting pot we are in the United States, we have many cultures represented that negotiate as a way of doing business. However, please consider it is much easier to negotiate from a fair market value then it is from an over-inflated price. At least with fair market value pricing, you will have more of a chance to start the process then if you are in left field.


– My least likeable seller. They often have a very blasé attitude and unless everything is perfect for them, and remains perfect throughout the entire escrow, they will often kill a transaction. Even if the move is not urgent, it is very important that your home should be priced correctly in order to preserve your options and marketing opportunities if and when the move becomes more urgent.


Many times I have heard from a seller who has an over inflated number in their minds that “we should give it a shot for a couple of weeks, and let’s see what happens”.

It is very important to properly price your home for sale right from the beginning. The biggest reason is that most showing activity takes place it the first two weeks of being listed on the MLS.
The reason for this is most Realtors maintain an inventory of buyers that are cultivated over time. These re buyers who come to the real estate agent through any different channels of marketing, including the internet, open house, advertising , referrals and from the Realtors personal sphere of influence.

When a home is first listed, agents look at it the hardest. In the not so distant past, Realtors would make arrangements so see houses of interest up close and personal. This was good for the seller to see, because the seller knew that agents were coming through. Today with the internet, many times a home is reviewed online and never actually previewed until a buyer has expressed a specific interest in this home or type of home.

However, the point remains the same, most of the activity is in the first two weeks. Realtors are spending time studying the changes in the market and letting all of their interested buyers know about the property. Once the first couple of weeks of activity diminish, the only activity is typically when a new buyer enters the market.

Because of the initial influx of activity, it is critical that the home is in it’s top condition and priced to sell right from the very beginning.


Another important aspect of pricing the home to sell from the beginning is how searches are made in the MLS. In its very simplest form, the MLS is nothing more than a big database of homes for sale, with many search variables.

Buyers on the Internet and Realtors have access to basically the same information. The data the Realtors access is more complete than what is available on the Internet.

When a search is made, the normal variables are the city, the number of bedrooms, square foot of the home and lot, perhaps what school the kids will go to and so on. Many of these are range searches, meaning they may look for homes with 4 to 6 bedrooms, when a 5 bedroom is ideal.

Price of course is a major criteria to search for in a home. Unlike the square footage of the lot or the number of bathrooms, price often cannot be adjusted past its limit. Unlike the difference between 5 bedrooms and 6, a home buyer can only afford what they have been approved for. If a buyer is qualified for a $400,000 home with a 15% down payment, it does them absolutely no good to look at homes priced at $405,000 with the hopes they will be able to negotiate down. Especially when there are so many homes available in their approved price range.

If your home is valued at $400,000 and you increase the list price by just 5% - that’s $20,000 above what the home is worth. No one who is approved at the $400,000 level will be looking at your $420,000 listing – even though it may be the perfect home for this buyer. Your prized possession simply will not show up in the searches made. Remember, no one wants to waste a lot of time house hunting.


This is the beautiful part about a down market, even if it is often misunderstood – buying up!

Let’s say you bought your home 5 years ago, or longer and you have not already taken out your equity. Let’s say you paid $250,000 way back when. Last year your neighbor sold his home, which is not as good as yours for $550,000; so you thought yours was worth at lest $600,000 then.

For sake of discussion, we’ll assume we have taken a 10% decrease in value over the past year, when your home peaked at $600,000, this means your home today would be worth $540,000 ($290,000 in equity before costs).

Now let’s assume that you found a real gem of a home last year for $1,000,000 that would have made your entire family very happy. This is a $40,000 gift for you. Let me explain…

Yes, when you sell your home, you will receive $60,000 less than if you sold it last year. But now, because the market has dropped 10% across the board your million dollar dream home is only $900,000. Had you sold your home at the peak of the market, you would have been buying at the peak of the market.

Now, with the difference in the $60,000 hit you took on your home it equates to a tax free $40,000 windfall offset by the $100,000 hit the seller of the new home took in selling it to you for only $900,000. As an added bonus, your new property taxes will be 10% less every year, had you bought at the peak of the market.


To wrap things up, let’s review the benefits of pricing your home to sell…


– A home that is priced right will sell quicker which reduces the carrying costs you have to pay every month in the form of mortgage, insurance, maintenance and other costs of ownership.


– It is so much easier to sell your home quicker. Save the energy of keeping your home in a model ready state of showing. Having a home listed for sale changes your lifestyle.


– There are more people who can afford the market value of your home and you will be showing them instead of the buyers who are comparing your home to the one with amore legitimist higher market value.


– Remember, the Realtors control the buyers and the more excited you can make a Realtor about a listing the more activity you will generate.


– When price is not an issue, your real estate agent will get more calls from the advertising which will mean more showings


– Buyers are much more likely to offer a full fair price offer then a home is priced right because they don’t want to insult the seller or lose the home to a better offer.


– The market will produce a higher sales price if the home is priced correctly. This means you will Net more dollars and you will have less carrying costs.

For more information please don't hesitate to contact me and allow me to help you gather the data to price your Hemet home to sell.

John Occhi, Realtor


Tuesday, October 31, 2006

Active, Sold & Expired A closer look for October, 2006 of the Hemet Real Estate Market

Today I thought I would take a closer snapshot of the real estate market on the East end of Hemet. For this report, I am focusing strictly on zip code 92544, which most of falls in the unincorporated area of Riverside county. This area is also known as both East Hemet and Valle Vista, although there are distinct differences once you become more familiar with the area.

First I check the Hemet MLS to see just how many properties are actively being marketed on the MLS and come up with 291. The first thing I realize is how inexpensive property can still be bought for in Valle Vista. (MLS #P528638) is a 2 bedroom condo on a small side street off of Acacia & Dartmouth.

So we know there are 291 properties currently for sale in the Hemet zip code, with a starting price of $135,000 going all the way up to a 20 acre ranch (MLS #P544383) for a mere $1,499,900. The ‘Medium’ price for a home in the area, currently for sale today, is $339,900 which means that 146 of the homes are priced less than that and 146 are priced higher than that.

The ‘Medium’ price should not be confused with the ‘Average’ price, which is $513,813. This number is calculated by adding the listing price of all 291 homes on the market (a total of $63,199,0389) and dividing by the 291 homes used for this calculation. In this case, if there was an ‘Average’ home on the market, it would be the 244th most expensive home in East Hemet.

An important aspect of the data, which is often over looked, is the commission. Now, trust me, I don’t want to come across as a greedy Realtor, but the truth be told, commission helps sell homes. I will post another article to this blog in the near future to further explain the importance of commission when it comes to selling a home, but for now, let’s look at the data and you can make your own conclusions.

First well examine the ACTIVE Listings on the Hemet MLS.

Overall Market - ACTIVE
Number of Listings: 291
Average Price: $391,904
Medium Price: $339,900
Total Inventory: $114,044,131
Days On Market: 84.67

2% Commission
Number of Listings: 13
Average Price: $306,508
Medium Price: $298,000
Total Inventory: $3,984,599
Days On Market: 48.54

2.5% Commission
Number of Listings: 109
Average Price: $428,270
Medium Price: $349,900
Total Inventory: $46,681,394
Days On Market: 87.25

3% Commission
Number of Listings: 154
Average Price: $369,707
Medium Price: $335,000
Total Inventory: $56,934,949
Days On Market: 87.24

3.5% Commission
Number of Listings: 4
Average Price: $369,700
Medium Price: $366,900
Total Inventory: $1,478,800
Days On Market; 34

4% Commission
Number of Listings: 8
Average Price: $520,910
Medium Price: $510,000
Total Inventory: $4,167,279
Days On Market; 71.28

5% Commission
Number of Listings: 2
Average Price: $290,000
Medium Price: $290,000
Total Inventory: $580,000
Days On Market; 66

Whenever you look at home statistics, the active price is often over-inflated. Sellers are hopeful that their home will bring top dollar and are often priced higher than actual market value. Many times, real estate agents will inflate the value for a listing presentation, hoping it will give them the edge when it comes to getting the listing, over the competition. (Again, this is a topic for another post) This price does not reflect reductions that will be taken as the listing ages nor does it take into account that the seller will typically accept an offer of less than what they had hoped to get.

The next set of numbers is referred to as the SOLD listings. These are the listings that closed escrow during the specific time period being reviewed, in this case the month of October, 2006 for the Hemet MLS in the same zip code 92544 as we looked at the earlier numbers.

Overall Market - SOLD
Number of Listings: 40
Average Price: $346,325
Medium Price: $264,500
Total Inventory: $13,853,000
Days On Market: 87.55

2% Commission
Number of Listings: 2
Average Price: $594,950
Medium Price: $594,950
Total Inventory: $1,189,900
Days On Market: 192.5

2.5% Commission
Number of Listings: 14
Average Price: $346,850
Medium Price: $282,450
Total Inventory: $4,855,900
Days On Market: 102.14

3% Commission
Number of Listings: 22
Average Price: $325,555
Medium Price: $ 299,500
Total Inventory: $7,162,200
Days On Market: 67.54

4% Commission
Number of Listings: 2
Average Price: $322,500
Medium Price: $322,500
Total Inventory: $645,000
Days On Market: 100.5

The last set of numbers that I will discuss today is the EXPIRED Listings. These are the listings that were listed with a real estate agent for a very specific period of time. 3 and 6 months are very typical listing periods, but they can be anything for a specific day to a year or more, especially when the property is unique and the seller is looking for that one special buyer.

Expired listings are the listings that the market has rejected. There can be a number of reasons. Being overpriced is always a top contender for the reason why a listing failed to sell. Other reasons may be the condition of the property; it may be cluttered and not staged properly; and believe it or not but there are times when a seller really does not want to sell and they will sabotage their own listing.

Let’s look at the expired listings in zip code 92544 for the month of October, 2006:

Overall Market - EXPIRED
Number of Listings: 41
Average Price: $427,807
Medium Price: $385,000
Total Inventory: $17,540,090
Days On Market: 134.73

2% Commission
Number of Listings: 3
Average Price: $401,833
Medium Price: $405,500
Total Inventory: $1,205,500
Days On Market: 163.67

2.25% Commission
Number of Listings: 2
Average Price: $660,450
Medium Price: $660,450
Total Inventory: $1,320,900
Days On Market: 91.5

2.5% Commission
Number of Listings: 17
Average Price: $479,812
Medium Price: $ 389,000
Total Inventory: $8,156,800
Days On Market: 129.17

3% Commission
Number of Listings: 18
Average Price: $382,272
Medium Price: $367,450
Total Inventory: $6,880,900
Days On Market: 142.61

3.5% Commission
Number of Listings: 1
Average Price: $299,900
Medium Price: $299,900
Total Inventory: $299,900
Days On Market: 87

Well, there you have it. A real hard look at real numbers and how they apply to the Hemet real estate market – specifically East Hemet in the 92544 zip code. These are not numbers that I can just push a button and have the computer generate this report. This was a time consuming research project that took several hours of crunching to bring it all together, so I won’t be generating similar reports for every neighborhood for every time period, but from time to time you can count on me looking deep into the actual numbers of the MLS and figuring out what they mean to me as a Realtor and you as a consumer.

Please come back and visit this blog often, as I will be writing several articles in the very near future using the data that I’ve gathered here today, and embellishing it with more statistical research into the current trend and condition of the Hemet Real Estate market.

If you have any questions, please do not hesitate to contact me directly at 951.443.6259. Just remember one thing as you look at numbers – something a mentor taught me 30 some years ago, something I’ll never forget,

“Figures don’t lie…Liars figure!”

Technorati - Take a Look at me Now

Today, Real Estate is like so many aspects of our life - ruled by technology, even Real Estate in Hemet CA. So for a California Ral Estate agent of the 21st century to be successful he (or she) must grasp new technologies on a regular basis - determining which ones are relevant today and which ones will have an impact on the real estate industry and their personal real estate business tomorrow.

One such technology is the newly evolved BLOG, which you are reading now. Just read anything about Search Engine Optimization (SEO) and you will find one of the most important tools today is having a BLOG.

So, once you have a BLOG, you still have to get peopel to find it in order to read it, right? Of course. And that is where a web based service like Technorati comes in. They are "THE" search engine of blogs.

The entire purpose of this post is let Technorati know that the Hemet Real Estate Blog is a live and well and should be searched by it's spiders (thats search engine talk for the process of searching and indexing websites - blogs in this case)

Technorati Profile

Monday, October 30, 2006

The Condition of the Hemet Real Estate Market

Good Morning, I have decided to spend more quality time with my blog and bring you up to speed with some of the data that is available to me.

I thought I would start this morning with a snapshot look at the available inventory of homes for sale.

To determine a monthly figure of the current available inventory, I have to conduct several searches of the Hemet – San Jacinto MLS. I look to see how many actual homes are for sale with a mailing address of HEMET I find there are currently 716 homes for sale.

Let me clarify a little bit about this data. It includes homes that are both in the City of Hemet as well as unincorporated county areas, like Valle Vista. The key is they all use Hemet as a mailing address.

For the most part these homes are what we call “Stick Built” – meaning they are a traditional construction homebuilt on site. Now there are rules that say a manufactured home on a permanent foundation can be classified as a house and not a manufactured home. Even though the MLS has a very specific section of its database for mobile and manufactured homes, many Realtors who list manufactured home on a permanent foundation will list it in the MLS as a ‘regular’ home.

I have not taken the time to weed through this list of 716, to see how many manufactured homes there are, but I am certain there are a few. I can say the lowest priced home currently listed in the MLS is a $125,000 senior condo on Palm (MLS #H730456) and the most expensive piece of property is a wonderful estate at the end of Esplanade, being offered for $2,200,000 (MLS#103905).

I can tell you what is not included and that is a good percentage if not most of the homes listed with agents from outside our valley. The reason is all MLS’s charge a fee to put list a home for non-member agents. So, let’s say an agent from Temecula takes a Hemet listing, chances are they will only list their listing in the Temecula MLS and not the Hemet MLS. This is not only a disservice to the seller of the home, but the buying public as well, since local Realtors typically do not spend the time nor do they typically have ready access to other MLS systems. I’ll discuss this at a later time.

So, back to my analysis of the current inventory level of homes in Hemet. We now know there are 716 homes for sale in Hemet. Next, I check to see how many homes have sold in the last 2 months. Between 8/30/2006 and today, 10/30/2006 I find a total of 189 homes have closed escrow. The least expensive (MLS #H729505) is another senior condo, this time on Santa Fe and it sold for $115,000. The most expensive home that sold in the last 2 months (MLS #H725950) is in the east end of the valley on Rim Road and sold for $799,900.

So, the next part of the equation is to divide the number of homes sold (189) into the existing inventory (716) and I get 3.788. Since my numbers represent a2 month supply of sales, I need to multiply the 3.788 by 2 in order to realize we currently have a 7.576 inventory of homes for sale in Hemet.

So, what does this mean to you? It means that if you are going to list your home with the intentions of selling it soon, you have to price it to sell. You cannot just put your home on the MLS and a sign in the yard and expect a pack of buyers to find their way to escrow – it just is not going to happen that way anytime soon.

If you would like information about the specifics of your home and how it fits into the inventory scheme of the current market, please give me a call and I’ll be more than happy to run the numbers for you – no hassle.

John Occhi, Realtor

Sunday, October 29, 2006

So, is there a Housing Bubble, or what is all the chatter?

There has been a great deal of chatter through the different media outlets over the past 6 months about this doom & gloom of the California Real Estate market. Well, being in the trenches everday, doing the things that Realtors do...I cannot report that I have been hit on the head with a piece of the sky falling.

Are things tougher then they were a year ago? Sure, mostly becasues of the chatter coming from the talking heads-the supposed experts. For every expert with a cup of alaphabet soup after their name that predicts one outcome, there is another just as credible explaining why nothing bad is going to happen to our real estate.

My opinion, is that yes, we are seeing some tough times in Real Estate, but we all knew the ride would not last forever - it would have been impossible to continue with 20-30% appriciation every year.

I believe there are two major economic indicators that were in place in the early 1990's, that just don't exsist today.

First, even if interest rates are higher this year than they were last, they are still historically low. This means the cost of money is still cheep. I remember in 1980 when I was in the service and rotated back stateside after 6 years service in Europe and I wanted to buy a home in Colorado Springs, just outside of Ft.Carson. I entered escrow at 18% for a new home. In those days they did not lock in rates. By the time the construction was completed, interest rates had skyrocketed up to 21%.

The Second economic factor that is not in place today is high unemployment. Again, the numbers today may not be the very best they have ever been, but anyone who has been around more than a couple of decades knows that what we have today is exstremely low and thereby good for society as a whole.

When I am asked these days about the market question, "What should I do?". I say do what you need to.

If you are a buyer, this is a great time to make lowball offers on homes, many of them are now being accepted when the sellers see there is a 8 or 9 month inventory of homes on the market. I tell those interested in selling, sell now as long as you are prepared to hear what the market is saying. After all, most sellers today are taking advantage of huge increases in equity. Yes, they may get a bit less today then when the market actually peaked, but does anyone really have any idea what will happen in the Spring of 2007, the traditional time for Real Estate to rebound after a winter of slow sales.