When it comes to buying in a new housing development, some people are like the tortoise, others like the hare. But whether they come in first or last, both can be winners.
Daniel Morehead bought the next-to-last house on his street in Owings Mills' Winterset development in February.
"I didn't really want to see a lot of construction. I didn't want to see mud in the street and Dumpsters and get a flat tire," he said.
Eric Buckner, who bought his home in Winterset in 1996, was one of the first -- trusting only in plans, pictures and the promises of the development's saleswoman.
He says he has one of the best lots in the community and has watched his home appreciate $18,000 in two years. "If I ever did it again, I'd definitely buy on the front-end of a development," he said.
Builders and consultants say the buyers' personalities often account for whether they are first or last in the sales office.
"There is a definite group of homebuyers that want to be trail blazers. They like it because it is new and they can get a better bargain," said T. Kevin Carney, president of Thomas Builders Inc. "There's another whole group that doesn't want to take risks. They want to see what a neighborhood looks like."
Most builders think the pioneers get the best deals. Builders are able to offer lower prices up front because their costs are lower, both in terms of the amount of interest they have paid on the land and the cost of subcontractors and supplies.
"When we open a job, generally our margins are less," explained Richard Azrael, president of Chateau Builders. "If you have some success, you'll raise prices."
Prices may rise by several thousand dollars over the course of a development's life. When Masonry Macks Homes Inc. started building at Worthington Park 10 years ago, the home prices started in the low $200,000 range. When they finished the project a few months ago, a similar home cost about $350,000.
"Real estate has a track history that, typically, homes have appreciated through the life of the community. Buying in the first section may bring you an increased value of your investment," said Jeb Bittner, the president of the Maryland Division of of Pulte Homes.
In the beginning, builders may also discount prices, offer free options and help with closing costs to generate excitement about a community and to get the first few houses started.
Linda and Michael Mullen received $2,000 toward closing and an additional $3,000 in free options when they bought in the Stone Manor subdivision in Eldersburg in 1997. "It was definitely an advantage to be early," Linda Mullen said.
Beyond the price advantages, buying early can offer other pluses.
Linda Mullen said that buying early assured them of a better lot. "It backs up to a fitness trail. There are no buildings behind us."
Still, the lot was not their first choice, she pointed out. They wanted a cul-de-sac that backed to woods, but had to change their plans when they learned that section of the development would not be built for several years.
Buckner said he liked being one of the first because the builder and subcontractor remained nearby in case he had questions or problems. When his toilet didn't work properly, he walked out the door and summoned the plumber who installed it, and the problem was promptly fixed.
But buying early entails some risks and headaches -- the noise and dirt of construction and the uncertainty of whether the community and the buyer's home will turn out as imagined. "You see this pile of dirt and you try to imagine what it would be when there are houses and street lights and nature trails," Mullen said.
When the Buckner bought his home, the street and sidewalks were not built and the only way to see the lot was over a bumpy back road. He and his wife didn't even have a model to see before they purchased. Still, he said, "It turned out like I thought."
Buyers need to do their homework, as well as have an imagination, said Joe Link, owner of MarketWise Strategies, a consulting firm for the building industry.
"If you go into a new development, you need to thoroughly question, see the overall community plan and site plan. You want to have some sense of the direction of the development," he said.
The bankruptcy of Regency Homes Inc. last year illustrates the kind of risk early buyers can face. When the company went out of business, it abandoned more than 200 homebuyers who had contracts for homes not yet built. Other companies have had to finish the work.
Being one of the last buyers in a development provides a better sense of its final appearance.
"A lot of people like to wait until a community is in. Then the community is established, and there is little or no construction around them," said Maury Bass, director of sales and marketing for Masonry Macks Homes Inc.
Although bargains are more rare in today's market, occasionally the late comers can get good deals. "The big question mark is how eager is the builder to finish up the community?" said Fritzi Hallock, a builder consultant who runs MarketSmart in Owings Mills. "If they are eager to get out, every day they hold the land is a day they pay the interest."
Buying the last house -- the model -- is a way to save on a long list of options, Link noted.
But each day a buyer waits is a day he runs the risk of losing prime building sites and price increases, builders and consultants noted.
"There are different risks at different periods of time," Hallock said. "You need to balance out what is important to you."
Pub Date: 4/11/99