by Michele Dawson

With the median size of new homes on the rise, you might worry about trying to sell your home if it's on the small side. Indeed, the size of the typical new single-family home continues to grow, according to a National Association of Home Builders report titled The Next Decade for Housing. The median size of a new home today is about 2,100 square feet; in 1970 the median square footage was about 1,400.

Some of today's buyers are using the extra space for guest rooms, but many are incorporating home offices, studies or hobby rooms into their homes, according to NAHB. Despite the trends, small homes have their own advantages when you're selling. For starters, there's a strong demand for entry-level homes. So, if your smallish home is on the market, you'll want to do everything you can to get top dollar for it. Some things to think about when you're preparing your home for showing include:

• Eliminating the clutter. Clutter is a downfall for any house, but in a small house, the more clutter the potential buyer sees, the less house he'll see. Keep the kitchen counters clear, eliminate all those knickknacks scattered about the house, and keep your accessories and artwork simple.
• Curb appeal. Remember - first impressions are everything. Let your home make a strong impact the moment anyone pulls up alongside the house. Spruce up your landscaping, keep your lawn manicured, plant a few annuals out front, make sure your front door area is free from clutter, bikes, skates, and the like.
• Letting the light in. This is a general rule for any home that will be put under the microscope by potential buyers, but is even more applicable for small homes. Open all blinds and curtains, and turn on lights throughout the house if you know real estate agents will be showing the home that day. Blinds that are the same color as the wall give a flowing, roomy feeling.
• Keeping the walls light. Dark-colored walls will make a room appear even smaller than it is. You may want to consider sprucing up your walls with a fresh coat of paint anyway, so stick to a light color. To create the effect of more light, paint the ceiling a color lighter than the walls.
• Paying attention to your furniture. If you have a lot of furniture, put some of it in storage. Then, think about the layout and focal point of the room and decide whether you're trying to accentuate roominess or coziness. If you're going for spaciousness, keep the large pieces against the wall. Furniture color should be similar to the wall and floor color. Too much will look cluttered and will subtract from the spacious feeling you're trying to achieve. If you're striving for a cozy feel, select dark pieces, whether it's fabric or wood. Go for big patterns on one or two pieces, placed away from the wall.
• Mirrors. Strategically placed mirrors can help make a room appear larger.
• Tall lines. Try to choose accessories that are long and narrow. Long, thin lamps and plants can help you achieve a sense of height versus accessories that take up a lot of horizontal space.
• Accentuating your back yard. If you have a decent patio area, present this space as an extension of the limited living space. Display a nice patio table with a patio covering or umbrella, spruce up your landscape, and brighten up the area with some containers filled with colorful annuals. An inviting back yard will stand out as a plus for many home shoppers, particularly in warm-weather states.

In summary, let common sense prevail. Look at the house with fresh eyes and from the perspective of someone who has never seen the house before. With so many first-time homebuyers out there, your biggest job will be making sure your home looks better than others in the same price range.

The spring and summer months are traditionally the busiest times of year for the residential real estate market. Weather is more cooperative and many families like to move while the kids are on their summer break. But in recent years spring, for many regions, has meant more homes on the market, but also more buyers, fierce competition and an increase in prices.

The National Association of Realtors projects the 30-year fixed-rate to average 6.5 % in 2004, up from a generational low of 5.8 % in 2003.  On the heels of three consecutive record years for home sales, the uptick in interest rates will offset some of the benefits of an improving economy," said NAR's chief economist David Lereah. "However, the impact will be fairly minimal because the fundamental conditions for a strong housing market remain -- a growing number of households, an improving job market and generally good affordability conditions."

If you're in the market for a house this spring, there are a number of steps you can take to try to give you the advantage over other homebuyers, including: •Consult with your REALTOR, get started early and let he or she know exactly what you're looking for. •Get pre-approved. This will give an advantage on several fronts.

Until the late 1970's, Northwest Florida was considered the states best kept secret. Now that the secret is out, and you too can enjoy some of the worlds prettiest beaches with your family.

There are a dozen beach towns along the Gulf Coast that are attractive to real estate investors - Panama City Beach, Pensacola Beach and Perdido Key. Also, the beaches of Hwy 30a, Fort Walton Beach, Navarre Beach and Destin to name a few. So what is it about this Gulf of Mexico paradise that has drawn so many into the local real estate market?

Northwest Florida is a mecca for sun-worshipers, shoppers, boating and sporting enthusiasts. There are more places and ways to fish than we can name here, but if fishing is what you are looking for, we've got you covered. People may come here for vacations, but they stay for the quality of life. According to Fortune Magazine: "Top neighborhoods: ... are Gulf Breeze, a peninsula in Pensacola Bay, is connected to the historic district by a three-mile bridge, is booming. Doctors, lawyers, and other professionals populate this bedroom community, where it's still possible to buy an older home for $180,000".

Gary Eldred, author of Investing in Real Estate, steers potential buyers to the relative affordability of the Florida Panhandle. Pensacola, in the Panhandle's northwest corner, is one of the cities that are on top when Michael Sklarz, chief valuation officer for Fidelity National Financial, crunches numbers looking for the best balance of value and growth around the country.

So, what is it about Destin that has drawn so many into the local real estate market?

According to Kim Gibbons, Panhandle Market Conditions "I would definitely consider Destin - Fort Walton Beach areas as being a strong buyer's market - there are many great deals for buyers since waterfront real estate here in the panhandle is still less expensive as compared to other Counties in South Florida".

As baby boomers continue to look for that retire home in the sun belt, the Florida Panhandle stands out as one of the best values.

Florida Home Sales Break 200,000 units; 2003 Ends with a 13 % Increase, Says Florida Association of Realtors

ORLANDO, Fla., Jan. 26 /PRNewswire-FirstCall/ -- Throughout 2003, the housing sector propelled Florida's economy into its current upswing and made the year one for the record books in terms of sales volume and median price, both statewide and nationally. By year's end, Florida reported a 13 % gain in the number of existing single-family homes sold and broke the 200,000 mark for annual sales, according to the Florida Association of Realtors(R) (FAR). In total, 203,243 homes changed hands last year compared to 179,631 homes sold the year before.

And the prices of those homes keep rising. Statewide, the median sales price rose 12 % to reach $158,400; a year ago, it was $141,700. In 1998, Florida's median sales price was $101,600, for a 55.9 % jump over the five-year period.

Russell Grooms, 2004 president of FAR and a Broker with Watson Realty Corp. in Jacksonville, says the 2003 home sales statistics demonstrate the phenomenal growth and continued strength of Florida's real estate industry. "The state's growth drives the robust housing market," he says. "And that won't change. Florida is expected to grow steadily in the years ahead. The state's population is predicted to increase by nearly 2.25 million people to reach almost 19 million by the year 2010, according to researchers at the University of Florida. Interest rates also are a major factor; while mortgage rates ticked up on occasion, they usually hovered around a favorable 6 % for most of the year. In fact, the annual average for the 30-year fixed-rate mortgage rate last year was 5.83 %. Demand for homes remained at a record levels in markets across Florida, resulting in tight inventory in many areas and impacting home prices."

Many housing industry insiders forecast the housing sector will see another near record year in 2004, with the nation's economic recovery gaining momentum and mortgage rates expected to remain lower than 6.75 %. Realtors predict another banner year for home sales in Florida. With low mortgage rates and strong appreciation values, Grooms says it's a great time to buy Florida real estate.

"Being involved in real estate, which is the driving force of the booming state's economy, is a responsibility that fills all Florida Realtors with pride," he says.

Last year's average of 5.83 % for a 30-year, fixed-rate mortgage was a significant decline from the 6.54 % average for 2002. FAR's sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state's larger metropolitan statistical areas (MSAs), Orlando reported double-digit gains in number of sales and median sales price in 2003 compared to the previous year. With a total of 30,343 homes sold last year, the figure was 15 % higher than the area's 2002 sales activity, when 26,338 homes changed hands. The median sales price rose 11 % to $144,200; the year before, it was $130,300.

Looking ahead to 2004, Greg Rokeh, president of the Orlando Regional Realtor Association and REO specialist with Watson Realty Corp. in Longwood, says buyers' demand for homes will remain strong, but continued tight inventory could constrict the area's market in the coming year.

Other large Florida MSAs reporting higher sales in 2003 compared to a year ago include: Tampa-St. Petersburg-Clearwater, where 30,544 homes changed hands for an 18 % increase; and West Palm Beach-Boca Raton, where 15,417 homes sold for a 4 % gain. The median sales price also rose in those markets last year: in West Palm Beach-Boca Raton, 24 % to $241,300; and in Tampa-St. Petersburg-Clearwater, 8 % to $143,700.

In the smaller markets, the Fort Walton Beach MSA reported 4,068 homes changed hands during last year, a 23 % gain over the 3,312 homes sold the previous year. The median sales price rose 9 % to $151,900; the year before, it was $139,600.

"The major factors fueling our market are the military and tourism and resort properties," says Roland Guidry, president of the Emerald Coast Association of Realtors and a Realtor with the Pat Guidry Agency in Destin. "The biggest economic impact on the area is the military, with Eglin Air Force base and Hurlburt Field."

Among the state's smaller markets, others reporting increases in home resales for 2003 compared to the previous year include: Panama City, where 2,332 homes sold for a 24 % boost; and Melbourne-Titusville-Palm Bay, where 7,565 homes changed hands for a 20 % increase. The markets' median sales price also rose last year: in Panama City, 15 % to $140,700; and in Melbourne-Titusville-Palm Bay, 15 % to $133,400.

A chart showing statistics for Florida and its 20 MSAs follows. The chart compares the number of existing, single-family home sales and median sales prices, based on Realtor transactions during 2003 and 2002. The median sales price is the midpoint in the price range - half the homes sold for more, half sold for less.

The Florida Association of Realtors, the voice for real estate in Florida, provides programs, services, continuing education, research and legislative representation to its 100,000 members in 70 boards/associations.

This information is based on a survey of MLS sales levels from Florida's Realtor boards/associations. MSAs are defined by the 2000 Census. Source: Florida Association of Realtors and the University of Florida Real Estate Research Center.

Florida Association of Realtors
For more information contact: Marla Martin, Communications Manager, (407) 438-1400 ext. 2326, or
Jeff Zipper, Vice President of Communications, (407) 438-1400, ext. 2314, both of Florida
Association of Realtors, (407) 438-1400

Peter Miller

Whether you're a buyer or a seller you want to succeed in the realty marketplace. That's natural and reasonable, but what are the steps you need to triumph?

Negotiation is a complex matter and all transactions are unique. Both sides -- buyer and seller -- want to feel that the outcome favors them, at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

How do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

1. What Does The Market Say?

At various times we're in a "buyer's" market, a "seller's" market, or a market where supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique -- it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who Has Leverage?

When you're on the front page of the local paper because your business went bust; you have less clout in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement -- the owner can sit back and pick the offer which represents the highest price and best terms.

3. What Are The Details?

Lots of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $5,000 of the buyer's closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount -- the $275,000 purchase price less the value of the roof repairs, closing credit, and other items. If you're a buyer, this is the deal you want. If you're a seller, you would prefer to be the second owner and give up nothing.

4. What About Financing?

Real estate transactions involve a trade -- houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

Has the buyer been pre-qualified/ pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available -- a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons.

However, buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain programs.

The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a property owner with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified individuals.

The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.

Alternatively, high rates and even rising rates may drive buyers from the marketplace -- and that's not good for anyone.

It used to be that down payments were a major financing hurdle -- but not anymore. For those with good credit, loans with 5 % down or less are now widely available. In fact, 100 % financing with nothing down, are now being made by conventional lenders. Reduced down payment requirements are good for both buyers and sellers.

5. Who Has Expertise?

Imagine you're in a fight. The other person has black belts in twelve martial arts -- and you don't. Who's going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?

What is the benefit to making the 'close date' near the end of the month?  

Answer

Mostly, this has to do with lowering your out of pocket costs by minimizing the amount of 'prepaid interest" you pay at closing.

Interest on your mortgage begins running from the date your transaction closes, but most loans are due on the first day of the month.  So when you close, you "pre-pay" the interest between the closing date and the end of the month..

For example, if you close on the 29th of September, you prepay one day of interest to cover the rest of September's interest. Your first payment will be due November 1st, when you will actually be paying October's interest.

As a different example, if you close on the 6th of October, you prepay 24 days of interest.  This means you have to bring in more cash to close your real estate purchase than would have been required by closing just eight days earlier.

However, the benefits of a late-in-the-month closing are only short-term.

With the September 29 closing, your first payment due-date will be November 1.  With the October 6 closing, your first payment is not due until December 1.

It just takes less cash "out of pocket" to close near the end of the month.  That is the major benefit.

Question of the Month

Before making an offer on a condo, I asked to see the Homeowner's Association documents like CC&R's, budget and so on.  I was told they would be provided AFTER I made the offer, but not before.  Is this customary?  

Answer

What you're asking seems to be common sense, but is unworkable.  You're asking for a stack of paper that could be thicker than a really fat book.  As a comparison, your property inspector or appraiser do not go through the property before you make an offer, either.  

  You see, an employee of the property management company has to photocopy that humongous stack of paper, then messenger it to you.  This takes time, labor, paper, and money.  They are not going to do it without expectation of earning their fee, known as the HOA Transfer Fee.  Keep in mind that the property management company earns this fee, not the Homeowners Association.  There are so many entities involved in a real estate transaction, it boggles the mind.  

What you can do is make your offer contingent upon a successful review of the documents.  Stipulate a specific period of time for you to receive them, then a number of days for review.  

In addition, most lenders review those same documents as part of processing your loan.  If the association doesn't pass muster with the underwriter, the project's properties won't qualify for financing.    So you have a backup expert reviewing the same set of documents that you are concerned about.  

Tip of the  Month

When you see a real estate advertisement that quotes a payment amount, it also must include a number called the APR.  That stands for "annual percentage rate."  When you apply for a mortgage, the lender is supposed to mail you a "good faith estimate" and a "truth in lending statement" within three business days.  The note rate is quoted, along with the APR.  

The APR is always higher than the note rate you are quoted.  

Why?  

Partly because APR is a totally artificial number.  It is not the note rate on the loan and does not determine your monthly payment.  It is calculated according to a formula determined by the government and is supposed to provide a method for comparing one mortgage offer against another, even when the rates, points, and costs differ.  

The APR is supposed to help you determine your "true cost" of borrowing.  

What follows is a simplification of how the APR is calculated:  

The lender totals up certain specific costs associated with the loan and the interest rate that was quoted to you.  Those costs are subtracted from the loan amount you inquired about.  That results in a figure lower than your loan amount.  Then the payment for your loan is calculated "as if" it were the payment on that lower amount.  

As a result, the APR is always higher than the note rate you are quoted.  The only exception is when the lender pays for all of your costs, which is often referred to as a "no cost" loan.  There really are costs -- the lender is just paying them for you.  

Keep in mind that the explanation above is a simplification.  Computers are used to actually calculate the APR.  Loan officers do not sit down with a pencil and paper and figure it out, even using a calculator.  

There is some guesswork involved.  For example, arms have an APR, too -- but no one really knows what rates will do in the future.  Also, no lender really knows all the costs until the loan actually closes (a subject for a future column) - that is why the Good Faith Estimate is called an estimate.  Since costs affect the APR, it cannot be accurately quoted until the end of the process.  

Even then, it is still a fictional number, a loan with a lower interest rate and higher points could easily have a higher APR than that quote at a higher note rate and lower costs, but your "true cost" of borrowing may depend more on how long you keep the loan than anything else.  Paying more in points to get a lower interest rate may save you more money if you intend to remain in the property for a long time -- even though it has a higher APR.