Saturday, November 28, 2009

Selling Smaller Homes

In this economic climate, more buyers are being lured to the charms of small homes. Find out what factors are attracting them and how you can promote these listings to consumers.

For buyers trying to play it safe in the softening housing market, a smaller home may be the way to go. Smaller homes tend to not only be more affordable but more energy efficient.

"'Not so big' has almost become chic. Conspicuous consumption is no longer cool," says Susanka, who defines a small home as a third less space than the buyer needs. "It doesn't mean 'less than.'"

Maximizing Square Footage in a Smaller Home

As an architect, Susanka became frustrated when discussions with clients always began with square footage. "I really tried to change the discussions away from size into the things that really matter," she says.

Genevieve Ferraro shares a 1,800-square-foot house in Evanston, Ill., with her husband, two children, and a dog. "Long story short, my husband refused to move to a larger house and I couldn't find a professional decorator who could help me design the house," she says.

Ferraro launched a business, The Jewel Box Home, two years ago where she helps owners of small homes address storage, child-rearing, landscaping, and color choices. She works with various budgets and sometimes all it takes is just a simple rearranging of furniture to make a small space appear bigger and more cozy.

"A smaller space needs a certain type of flow," Ferraro says. "There's this conventional wisdom that bigger is always better and we have all sort of bought into that. There's a stigma that small homes are second-rate."

With a small home, you don't have to sacrifice design or functionality. For example, Ferraro offers some of the following tips for making a small home feel not so small:

•Decide on the room's primary function and let that guide your decorating.
•Keep color, furniture, lighting, and accessories in proportion. In other words, no large-scale pieces should be in a small room. Keep all the furnishings small and it will enlarge the space.
•Rearrange furniture so that the legs show on all of your upholstered pieces. This creates a feeling of space and light and allows the eye to travel across the room and see "through" furnishings.
•Keep tabletop accessories to a minimum. Have no more than three coffee tables and side tables. If you have a large collection of accessories, display them in rotating groups.

The Convenience Factor

In the historic districts and city centers of Maricopa County, Ariz., which includes Phoenix, smaller homes have only recently became affordable. A big part of their attraction is being within a short walk to restaurants, bars, shops, and other services.

"People can pick up foreclosures or flips and can spend their money on furnishings and fixtures … making it a luxury property on a better budget," says Heather Wagenhals of HQ Real Estate and Investment in Phoenix. "You can create your own paradise within four walls, and it doesn't have to be 10,000 square feet. We're seeing some really gentrified areas turning into charming places to live."

Tony Frantis specializes in selling homes in the Sugar House neighborhood of Salt Lake City, near the University of Utah, the state's largest employer. Homes here—built between 1890 and 1950 and a mix of classic bungalows and Federal/Victorian style—range somewhere between 800 and 1,100 square feet and sell for $190,000 to $300,000.

"When people are looking for small homes, they're gravitating toward areas that are neighborhood-rich," says Frantis. "Most of these people could walk to anything they need."

Some new-development communities also think smaller is better. Diane Balciar sells homes in Westhaven, a development in Franklin, Tenn.

"It's like a Rockwell scene," she says, referring to beautiful streetscapes (along with a dedicated person who visits homes to help with gardening), monthly concerts, a town center with shopping and dining, and a 15,000-square-foot clubhouse with a fitness center. An elementary school is on the horizon. Home sizes start at 2,000 square feet (the average is 3,200 square feet), beginning at $280,000 for a two-bedroom property. But the most popular home purchase are the smaller houses, she says.

An Economic Decision

How home buyers arrive at the decision to live in a small home varies, of course. Kerri Campbell and her husband never thought they'd end up living year-round in a 480-square-foot house they built four years ago as a vacation getaway. In 2007 they sold their sizeable house in Kansas City and relocated to this rustic abode deep in the Ozark Mountains, an hour from Branson, Mo.

"We were ready for a change. Our intention was to either build onto the house or build another house," she says. They hadn't counted on building costs to double and being forced to accept a lower asking price on their Kansas City house. So they decided to make the small house theirs.

With the tighter corridors, they have less space to spread out.

"It's renewed our relationship and made us like each other again," says Campbell, who is writing a memoir about small-house living.

Indeed, many people are looking for a simpler life and a small home equates to that, says Gregory Paul Johnson, co-founder of Small House Society, which gets 25,000 visitors a month to its Web site.

He points to the New Urbanism movement (which promotes walkable neighborhoods) and that more people are using cafes as their living room. Plus, appliances—especially televisions—are smaller than they once were and no longer compromise space.

"People are getting stressed out and overwhelmed, and the economy's just part of that," Johnson says. "The bigger the house, the bigger the headache."

Source: By Kristine Hansen | December 2009/Realtor Magazine

Fannie Mae: New Affordable Housing Options

Fannie Mae announced Tuesday that it has launched several initiatives designed to stabilize neighborhoods and promote purchases by owner occupants and low-income buyers.

Fannie Mae’s “First Look” initiative offers buyers who intend to live in the home, particularly low-income buyers, an opportunity to make an offer during the first 15 days the property is on the market. Investors can only make an offer after the first 15 days have passed.

Other programs aimed at stabilizing neighborhoods include:

Deposit Waivers. Fannie Mae will waive the earnest money/deposit requirement for public entities using public funds to purchase a Fannie Mae-owned property. Individual home buyers who have qualified for public funds and want to purchase a Fannie Mae-owned property do not have to meet the usual earnest money/deposit requirement either. Deposits for these buyers can be as low as $500.
Reserved Contract Period. Upon receipt of an acceptable offer, buyers have the ability to renegotiate their offer after obtaining an appraisal.
Extra Time for Closing. Buyers receive up to 45 days to close – 15 days more than is usually permitted for purchases of Fannie Mae-owned properties.

Source: Fannie Mae (11/24/2009)

Declining Dollar Brings Foreign Investors

Falling prices for real estate and the declining value of the dollar are luring investors from all over the world to purchase properties for as little as half what they might have paid four years ago.

"This could be a once-in-a-generation opportunity for real estate investment," says Arthur Wong, whose Calgary, Alberta-based U.S. Real Estate Fund has invested $5 million in properties in the U.S. Southwest and plans to buy millions more.

Buyers from countries like Brazil, Canada, France, and the Netherlands, whose currencies are particularly strong against the dollar, are spending millions on luxury condos in New York City, Las Vegas, and Miami. Foreign buyers also find the warm climates of California, Texas, and Arizona attractive.

Peter Zalewski, a principal with Miami-based Condo Vultures, says he has sold foreign condo buyers seven bulk deals in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela.

Source: MSNBC (11/22/09)

Tax Credit Quandaries Answered

The complexity of new home buyer tax credits leaves potential buyers with many questions. Here are answers to some of the most confusing:

How does a current home owner qualify for the $6,500 credit?Buyers must have lived in their homes for at least five out of the last eight years. The home they buy must become their primary residence, but buyers don’t have to sell their previous home. They can use the previous home as a rental or a second home and still claim the credit.

Does the new home have to be more expensive than the one the buyer currently owns?No. It is fine to use it to downsize. If the property sells for more than $800,000, the buyers don’t qualify.

Can buyers who are building a new home claim the credit? Yes, although the contract must be in place by April 30 and the buyer must move in by July 1.

Can buyers claim the credit if they purchase a home from a relative? No. The legislation prohibits taxpayers from claiming the credit if the sale is between “related parties,” including parent, grandparent, child, or grandchild.

Source: USA Today, Sandra Block (11/24/2009)