Upgrading now, not later

Bumping up: Older buyers ask for more options

younger buyers may request more space. Both pay more for the upgrade.

February 10, 2002|By Adele Evans | Adele Evans,SPECIAL TO THE SUN

When Lee and Robin Walker bought their home in Ellicott City, it became more than a new house: It became their very expensive canvas.

One would think that a home with a base sales price of nearly $420,000 would come with just about every material upgrade imaginable. Not these days.

When choosing options for their 4,500 square-foot, four-bedroom Colonial to be built by Ryland Homes, the Walkers went for the works.

Among the $73,000 worth of enhancements they selected are:

A three-level morning-room extension and sitting room off the master bathroom. Price: $23,100.

A full bathroom off the guest room. Price: $3,740.

Recessed kitchen lighting. Price: $480.

Corian kitchen counters. Price: $1,955.

Upgraded flooring. Price: $6,576.

Upgraded stove with overhead microwave. Price: $1,250.

Finished basement, including exercise room, family room and full shower bath. Price: $20,125.

"We figured by doing the options now it would cost less; it would be in our mortgage," Robin Walker said. "They also offered us an incentive to do them."

With the grand opening of The Preserves at Mount Hebron, Ryland, as an enticement, was offering buyers a maximum credit of $17,500 to go toward the purchase of options. The Walkers took advantage and were able to roll $55,500 into the mortgage.

"We liked to choose the options. You're able to put what you like in the home," Robin said.

Buoyed by low mortgage interest rates ranging from 6.75 to 7.25 percent, a competitive building climate and choosier buyers, options are selling like crazy.

Years ago it might have been just upgraded carpet, hardwood floors or a deck, but today buyers often pay tens of thousands of dollars for luxuries.

Instead of waiting years to upgrade their homes, owners prefer to get improvements made during construction and add the costs to the mortgage. Sometimes the cost added monthly to the mortgage is just a few dollars; other times it can be several hundred dollars.

"It's stressful enough just to move in," said homebuyer Mark Dewey, who with his wife didn't want to deal with making future additions. "We're in our 40s, and we want to stay here until the kids graduate from high school or college. We wanted to plan ahead and get exactly what we wanted."

The Deweys, who added more than $33,000 in options, are to move in in April.

"People like to feel they can customize and personalize their homes," said Larry Zarker, vice president of marketing for the National Association of Home Builders. "Builders want to give enough in the basic package but let the customers personalize the home. That's better marketing."

"We don't want to spend your money for you; it's your choice," said Earl Robinson, sales and marketing manager for the Baltimore division of Ryland Homes. "We sell an equipped home that can be personalized."

Robinson said Ryland's option list covers 10 pages and the selections can go into the hundreds.

Builders walk a fine line between what to offer as an option and what to keep standard. If they make too many items options, they can appear to be nickel-and-diming the client. If they include too much as standard, they risk making the home too expensive for the market and too complicated to build.

"It's a fine balance," Zarker said. "You must develop a product that draws them in but not overprice it."

"We always try to do what's feasible," said Tim Morris of the Williamsburg Group, which annually builds about 50 upper-end houses in Howard, Prince George's, Montgomery and Carroll counties. "We start with our floor plans [15 to 20 choices] and go from there. It's not easy, but it keeps us in business. We're geared to it."

"Anything you add in as standard bumps up the house price," said Linda Veach, executive vice president and general manager for Harford County-based Bob Ward Homes. "You don't want to include so many things that you make it unaffordable - but you don't want a cookie-cutter home."

Nevertheless, some things made the leap from option to standard because of customer demand. Built-in microwave ovens and hardwood foyers are two major examples.

Like health plans that charge patients more for using "out-of-network" doctors, builders such as Ryland often charge a markup for a "custom" upgrade that isn't included in their options packages.

The Deweys wanted a particular kitchen range configuration, gas line and back-splash that weren't on the options menu, so they had to pay a $200 "custom feature" fee to have plans drawn up and reviewed by Ryland.

"I don't know how many times they said, `We're not custom builders,'" Mark Dewey said of the negotiations.

Mass-production builders often won't allow outside subcontractors to work in their homes because they can't provide warranties for their work, Veach said.

Robinson said Ryland isn't a custom home builder and typically discourages changing its offerings.

But when buyers organize their option wish lists, additional space - usually called "bump-outs" in the business - usually is at the top.

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