And now, in the latest sign of the cooling home sales market, a luxury home builder in Rockville has begun resorting to the kind of tactic usually reserved for screaming electronics discounters -- the Lowest Price Guarantee.
To ease buyers' worries about declining prices, Mid-Atlantic Builders will adjust its sales contract if the price it is charging for one of its houses falls from the time a customer signs an agreement to 45 days before settlement. So, the thinking goes, jittery buyers shelling out $500,000 to more than $1 million for one of the builder's single-family houses can rest assured that they're not sinking money into a depreciating asset.
"That's a very real fear," said John J. Lavery, director of sales and marketing for the home builder. "Obviously, there's been a big correction in the market. Our view is that it's the lowest point in the market cycle now."
While builders and developers have for months been dangling tens of thousands of dollars in incentives to prod hesitant buyers -- free upgrades, help with closing costs, plasma screen TVs, vacations, cars -- Mid-Atlantic's latest marketing strategy is unusual in that it leaves the most important line in the contract, the selling price, somewhat open-ended.
Builders, Mid-Atlantic included, offer such enticements because they are reluctant to upset previous buyers by cutting their base prices. But in some places around the country, builders have begun cutting those prices, too.
Lavery said his company came up with the promotion after much market analysis, once it noticed sales slowing, customers hedging and its waiting list disappearing.
"We know people want to buy because traffic remains very strong," Lavery said. "Yet people aren't making the decision to buy as rapidly as they used to."
Mid-Atlantic has not reduced its base home offering price, but it has increased incentives to as much as $55,000. Those will figure into the lowest-price promotion, so if $20,000 in incentives are available one month, and two months later the buyers in the same subdivision are offered $30,000, the earlier buyers will be credited for that extra $10,000.
For the past four years, Mid-Atlantic, which sells about 125 houses a year, has built solely in Prince George's County. The housing market there this year has fared better than elsewhere in the region.
Still, one home buyer, Lorenzo Wooten Jr., said that even in his Prince George's County neighborhood, he has noticed more houses on the market and longer sales times. Wooten and his wife, Courtney, signed a contract last month to buy a $1.2 million house in Mid-Atlantic's new Bradford's Retreat subdivision at Woodmore North. They are among the program's first customers.
The Wootens' new house, which has four bedrooms, 3.5 bathrooms, a four-car-garage and a spa bath, is scheduled to be ready in July. In the meantime, they won't have to worry about their future neighbors getting a better deal.
"I feel pretty comfortable where the Washington, D.C., market is," said Wooten, 33, a regional manager for Fannie Mae. "I really don't think that they would have offered this price guarantee if the prices weren't fairly priced currently."
http://www.washingtonpost.com/wp-dyn/content/article/2006/08/29/AR2006082901486.html?referrer=emailarticle