Options Snare Many A Buyer

Incentives: Whether Offered In The Form Of A Finished Basement, An Extra Fireplace Or Help With Closing Costs, Incentives Have Become A Valuable Tool In The Marketing Of New Houses.

April 20, 1997|By S. M. Tueting | S. M. Tueting,SPECIAL TO THE SUN

It was time for Ron and Nancy DeHaven to pack their bags again. This would be move No. 14.

Their youngest child had just graduated from high school and Ron, a U.S. Department of Agriculture veterinarian, was being transferred to Maryland from Sacramento, Calif. Going cross country wasn't going to be easy.

There was so much to learn with just a few days' time to buy a house while visiting the area in October. They had to get to know the lay of the land, figure out where they wanted to live, how far their money would go and who the quality builders were in the area.

"Obviously, we were looking at price first," Nancy said as she kept unpacking a mountain of cardboard boxes still littering her new home two weeks ago. "We [preferred] a small town that's close to a large town."

With those thoughts, they rented a car and drove around the area. They stopped at gasoline stations and doughnut shops, gathering information. Then, armed with a short list of builders and accompanied by a Realtor, the couple ended up in the Ryland Group Inc.'s Walden subdivision in Crofton, where homes sell for an average of $312,000.

"We were drawn to Walden because of the incentives," Ron said of the community of large, single-family homes bordering a golf course.

In an effort to sell the remaining lots in the subdivision, Ryland was offering to throw in a finished basement with a half-bath, a $9,000 value. The builder also was offering $9,000 toward closing costs. In addition, Ryland had advertised that homes in the community came standard with a brick front, a fireplace and a bumped out [enlarged] room, such as the family room, a package worth about $20,000.

After touring the model home several times and walking around the available lots, the DeHavens knew they'd found their next home. After a little negotiating, they agreed on a 2,450-square-foot, four-bedroom home with a bumped-out kitchen nook.

"By the time we got through with everything, we were able to afford a house in a nicer neighborhood," said Ron, stressing that the incentives allowed him and his wife to get more house for their money. "[Those incentives] certainly helped get us in the door here."

Incentives. It's one of the hottest marketing tools right now for builders across the Baltimore area, according to local real estate professionals. With a large surplus of new homes for sale throughout the area, coupled with intense competition, builders are doing whatever it takes to grab a buyer's attention, get him or her into the homes and make a sale.

Need help with closing costs? No problem.

Want a finished basement? You got it.

Interested in frequent-flier points? They're yours.

But, with all the promotions and incentives, many buyers wind up feeling dazed and confused after shopping for a home. Yet, it doesn't have to be that way, industry experts and builders said. Instead, if buyers do a little homework, they will come to good decisions that will benefit them and their new homes for years to come.While the circumstances may differ, builders offer incentives for one reason -- they want to sell homes.

Generally, in areas where there is a large demand for homes and little competition, builders will offer few incentives to buyers. But if the supply of homes is greater than the demand, or if competition is intense, builders are more likely to offer incentives as a way to draw attention to their developments and sell homes, according to William Young, director of consumer affairs for the National Association of Home Builders.

In a 1996 Builders' Economic Council Survey, produced by the National Association of Home Builders, members were asked what marketing strategies they used.

Of the 403 members who responded in offering one or more:

36 percent said they include optional items at no additional charge.

26 percent said they pay all fees and closing costs as allowed by law.

25 percent said they offer special price incentives.

22 percent said they offer special preconstruction prices for new phases of developments to attract buyers.

In the DeHavens' case, Ryland had about eight lots left in the golf course community. The prime lots that backed onto the golf course were all sold, leaving ones that backed onto a road, said Kimberly Brannon, community sales manager for Ryland Homes at Walden.

"We really want to get rid of these lots," Brannon said, referring to the bevy of incentives being offered to homebuyers of the remaining lots. "You never do it if the homes are selling that well [but] our goal is to be out of here in 90 days."

There's also the competition factor, which looms large with the number of builders in the Baltimore area. In this case, incentives are strong marketing tools that help distinguish builders from one another and attract buyers' attention, said Tim Naughton, sales manager for the Ryan Homes Inc. Baltimore South Division.

"We try not to get carried away with them and still be the best value overall," he said.

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