Forget the adage that there's no free lunch. In local real estate circles, the free meal has arrived -- as well as the free fireplace, the free car and the free trip to Hawaii.
Pressed by sagging profits, local builders and developers are relying on incentives to lure buyers. Usually, these deal-sweeteners offer abnormally low interest rates, or payment of closing costs.
But creative developers are dreaming up unique methods of attracting purchasers, methods that can range from the sublime to . . . well, the meaty.
At The Residences at The Colonnade in Guilford, for example, you can pick up a $226,700 Rolls-Royce convertible (or, should German cars grab your fancy, four BMWs) simply by purchasing a $1,300,000 penthouse condominium.
At the other end of the spectrum, Matson Homes Inc., a builder of single-family homes in Harford and Baltimore counties, is throwing in a free deck, gas grill and 50 pounds of filet mignon to each buyer. Those who aren't interested in barbecuing can receive a $2,500 discount on the house, or can use the money toward closing costs or other options.
"We figured, what do we have to lose? Business was slow," explained Joe Matarrazo, president of Matson Homes Inc. and builder of seven local developments, including the Fields at Seminary in Baltimore County and Forest Lake in Harford County.
Traffic in sales centers has doubled since Matson Homes launched the promotion at the beginning of August, Mr. Matarrazo said. The promotion also has increased sales, he said, although he did not release figures.
"We get people coming into the sales centers with the ad, and saying, 'Gee, 50 pounds of filet is a lot of meat,' " said Mr. Matarrazo, who plans to end this promotion soon and launch a new one.
Also available are incentives that try to allay buyers' fears about their economic security.
Michael Beccio of Beccio Homes Inc., a builder of single-family homes in western Baltimore County, is offering a year's worth of free unemployment mortgage insurance to homebuyers. Currently, the company is set to build six new homes in the Randallstown development of Kings Point at Marriottsville.
If a buyer is fired or laid off, the insurance will cover the mortgage principal, interest and escrow up to $2,500 per month. The insurance, which is being provided through Homestead Insurance Co. of Hoboken, N.J., covers an owner for up to 12 consecutive months.
For the houses being sold by Mr. Beccio, which range from $140,000 to $170,000, annual premiums for the insurance are between $250 to $350. If buyers want to extend the insurance coverage, they can arrange it at settlement.
There are restrictions to the insurance: It is not available to certain buyers, including migrant workers and elected officials, as well as those under 21 or over 59.
Still, Mr. Beccio believes that the insurance, which he began offering at the start of September, will help win over many hesitant buyers.
"As I perceive the situation, there are a number of people out there who would very much like to buy a new home now, but are very concerned about their job security," he said. "We're doing the best we can to alleviate those concerns."
Along more traditional lines, Five Oaks Development Corp., builder of a 109-unit town house community in Owings Mills New Town, is offering up to $4,000 in closing costs or options to buyers. Those who purchase a town house of about 1,860 square feet receive either $2,000 in closing costs or $3,000 in options such as fireplaces or recreation rooms. Buyers of the 2,500-square-foot model receive either $3,000 in closing costs or $4,000 in options.
"Basically, this allows people to come to the settlement with less cash," said Cliff Perlow, vice president of Five Oaks Development Corp., noting that buyers often are deterred by the burden of closing costs. "The way the marketplace is right now, people are tentative about buying. This gives them the push to go over the edge."
About 60 of the 109 town houses in the development have sold since they went on the market in the summer of 1990. The incentive program, which the developers set into place about six months ago, helped jump-start sales, Mr. Perlow said.
"The incentives brought sales back up to the pace we'd had before, which is about five [town houses] a month," he said.
Builders and developers aren't the only ones offering incentives. Some individuals selling their homes have offered a car or a trip to Hawaii through their brokers to attract buyers, said Jeannie Pohlhaus, president of the Greater Baltimore Chapter of the Women's Council of Realtors. And paying higher commissions and bonuses to agents are not unheard of.
"The problem is that there are more homes on the market than buyers, so some people are trying to be very creative about selling their homes," Ms. Pohlhaus said.