- The Washington Times - Friday, April 3, 2009

The first-time-homebuyer tax credit seems to be stirring interest among potential home purchasers, but new homebuyers should also consider what is being offered by area builders to “sweeten the pot” and bring them in to sign contracts. Guaranteed low-interest rates, paid closing costs and even job-loss protection plans are available, along with spectacular options such as spa baths and elaborate outdoor living areas.

Many potential homebuyers are hesitant to make a large purchase at the moment, despite factors that make this an excellent time to buy a home - there are plenty of homes on the market, affordable prices and low-interest rates. Yet builders understand why buyers are reluctant to finalize a decision on a new home. Buyers are fearful that home prices could drop further, they worry that the recession could deepen and cause more job losses, and they wonder if interest rates could be lower in future months.

In addition to these shared concerns, first-time buyers sometimes face difficulty in saving enough cash for the down payment and closing costs, while current homeowners sometimes have concerns about selling their home.

Builders have created an array of incentives and promotions that address all of these concerns, and most will work on an individual basis with each buyer to cook up an incentive package with the right ingredients for each family.

Local builders have started lowering prices on homes in response to the market, but they find that offering other promotions can encourage buyers to make a move.

Many, but not all, builders require buyers to work with an affiliated or preferred lender in order to qualify for certain incentives and promotions. The Department of Housing and Urban Development (HUD) has introduced new rules under the Real Estate Settlement Act, currently delayed until mid-July, which may limit the ability of builders to offer incentives tied to the use of a particular lender or settlement company.

Miller and Smith LLC provides buyers with the names of three preferred lenders and title companies who work regularly with the builder and are familiar with the new-home buying process.

Currently, Miller and Smith (www.millerandsmith.com) is offering a $10,000 “housewarming gift” for buyers to use in a variety of ways. The money can be used for closing costs, options or window treatments, but could also be applied toward gift cards for groceries, spa treatments, dining, clothing stores and more. This promotion expires on April 30.

“Everyone’s situation is different, so we like to offer incentives that can be used in lots of different ways,” says Rhonda Ellisor, executive vice president of Miller and Smith. “For the most part, people are practical and use the money for closing costs and options, but some buyers may not need that help, and we like to give them a warm and fuzzy choice for using the money.”

Mrs. Ellisor says that if individual buyers request other assistance, such as a buy-down on the interest rate of a loan, Miller and Smith can work with them on a case-by-case basis.

K. Hovnanian Homes (www.khov.com) is offering buyers who purchase one of their immediate-delivery homes a 30-year fixed-rate loan with an interest rate of 4.78 percent. Dee Minich, senior vice president of sales and marketing at K. Hovnanian, says that they are working with the Federal Housing Administration (FHA) loan program so that most buyers can qualify for approximately a 5 percent interest rate on all their homes.

Ms. Minich says that K. Hovnanian pays closing costs for most buyers, normally at about 6 percent of the home price, or they include optional interior design features for free. She says they design an incentive program for each individual who wants to buy a home, but most want closing cost assistance above all.

K. Hovnanian also has a “gold seal” program, which assists buyers with homes to sell by sprucing up their landscape and staging their home to help it sell.

M/I Homes (www.mihomes.com) is offering financing with a low-interest rate of 3.875 percent for the full 30 years of a fixed-rate loan. The offer applies to their “express delivery” or spec homes only, and buyers must close on the home within 30 to 60 days of signing the contract. Buyers must use the builder’s preferred lender, qualify for the loan with a good credit score and make a down payment of 20 percent of the value of the home.

Katie Harlan, marketing manager for M/I Homes, says they also have other loan programs that require just 3.5 percent down and have an interest rate of 4.75 percent.

“We provide closing cost assistance that varies from $5,000 to $20,000, depending on the community,” says Ms. Harlan. “Some of our programs can be combined, and we also offer discounts on options. Basically, we want our buyers to put the money towards what they need. First-time homebuyers have different needs than other buyers, and credit-challenged buyers need more assistance and usually focus on the interest rate and closing cost assistance.”

M/I Homes also offers a “price protection program,” which guarantees that if the price of a home drops between the time of purchase and the closing date, M/I will credit the difference to the buyers.

Beazer Homes Corp. (www.beazer.com) pays the allowable maximum of closing costs assistance on their homes at every community, along with a minimum of $10,000 toward design studio options. They do not require the use of a preferred lender at any location to take advantage of these incentives.

Beyond these incentives, Beazer Homes in the mid-Atlantic region is offering a “welcome to spring” promotion that features an expanded range of outdoor living amenities.

“We think everyone is ready for spring after a long, hard winter, and people are looking for ways to entertain more easily at home,” says Celie Holmes, vice president of sales and marketing for Beazer Homes in the mid-Atlantic region. “We’ve affiliated with Amenity Resources in Maryland to create customized outdoor living packages for all our condominium, town home and single-family home developments. Buyers can look at the menu of amenities and decide how they want to expand their outdoor living space, then roll the cost into the mortgage. We will be offering discounts on these amenities, too.”

The range of outdoor options includes grill islands, outdoor kitchens, fire pits, pergolas, outdoor heaters, sound systems and colorful paving stones. The outdoor living areas are designed to be usable for most of the year.

Mid-Atlantic Builders Inc. (www.midatlanticbuilders.com), in addition to offering about $10,000 in closing costs for most communities, has two unusual programs to entice buyers. They have a “make an offer” program on their inventory homes and a guaranteed-sale program that offers assistance to buyers who need to sell their existing homes.

“Our ‘make an offer’ program has been working very well for us,” says John Lavery, vice president of sales and marketing for Mid-Atlantic Builders. “It’s just a simple, two-page form online that allows potential buyers to offer a price and conditions for buying one of our immediate-delivery homes. We respond within 48 hours with either an acceptance notice or a counteroffer. This also allows people to let us know in an easy way what they think about current pricing.”

Mr. Lavery says that move-up buyers who need to sell their current home can take advantage of three programs from Mid-Atlantic Builders.

“We have approved Realtors we work with, similar to our approved lenders, who can work with our buyers to help coordinate the sale of their home,” says Mr. Lavery. “These Realtors can give the sellers reliable, accurate information about the market and their home, including staging and improvements they can make and an accurate comparative marketing analysis. If the sellers choose to list their home with this agent, then we help them by paying 1 percent of the Realtor’s commission.”

Some sellers may also qualify for Mid-Atlantic’s guaranteed-sale program, which means that Mid-Atlantic, working with a preferred Realtor, plans a personalized program that guarantees the equity in the home and the maximum time frame it will take to sell. Mr. Lavery says that this program generally works best with homes valued at less than $450,000.

On top of closing cost assistance, Mid-Atlantic also offers half off on options such as a morning room addition or a spa bath in the master suite.

“We offer different promotions each month, but we are also focusing on creating an understanding among buyers that they should be looking for quality as well as a good price,” says Mr. Lavery. “Most of our buyers now say they want to live in this home for 10, 20 years or longer, so they want a customized home. We want to make sure they understand the quality of the materials we are using so that they understand all they are getting for their money.”

Brookfield Homes Corp. (www.brookfieldwashington.com) is offering a variety of incentives and programs that are meant to encourage buyers and to assuage their fears about buying a home. These promotions are in place until April 10.

“Our ‘reassurance guaranteed program’ ensures that mortgage payments will be made even if someone loses their job,” says Gregg Hughes, general sales manager of Brookfield Homes. “This program takes care of the recession fear that a lot of people are feeling, even if their job is secure.

Mr. Hughes says that many buyers worry that interest rates will drop even more after they make an offer on a home, so Brookfield is offering 4.5 percent interest rates on a 30-year fixed-rate loan. This program requires the use of a preferred lender.

“We’ve also found that potential buyers worry that home prices will drop further before they go to settlement,” says Mr. Hughes. “We have a price guarantee, which says that if the price of the home changes between the contract date and the settlement date, we will lower the price.”

Mr. Hughes says Brookfield continues to offer community-specific incentive programs with closing cost assistance and some options included in the price of the home. He says the company will customize all their programs to meet the needs of individual buyers.

Toll Bros. Inc. (www.tollbrothers.com) offers a “mortgage protection plan” on every home they sell. This is a job loss protection program that guarantees that the mortgage principal, interest, taxes and insurance will be paid for six months (up to $2,500 a month) if the buyer loses a job within the first two years after the settlement date. The builder feels that this added security can help potential buyers feel more confident about buying a new home.

In addition, Toll offers a variety of incentives at each community, such as offering $20,000 in closing costs and even “dollar options” that allow buyers to add a deck or a finished basement for just $1. Many of Toll’s promotions last for just one weekend at a time, while others are in place for a month or more.

Toll also has programs in place to help potential buyers who are concerned about selling their current home. For example, the company will extend delivery of the new home for up to six months or longer to allow for an extra cushion of time to sell the current home. Toll also offers home staging consultations and services such as painting, cleaning or minor repairs as part of the “ready to sell” program. While some Toll buyers can take advantage of the first-time-homebuyer tax credit, the company reminds their move-up buyers that the first-time-buyer tax credit can function as an incentive for someone to buy their home.

Winchester Homes Inc. (www.winchesterhomes.com) prides itself on individual attention for each buyer, particularly with their “your home, your way” program that allows each buyer to customize their home prior to construction. Winchester’s promotions, including closing cost assistance and discounts on options, vary from community to community, and each sales agent can customize these programs to individual buyers. The company also offers a “departure residence” staging program to help their buyers sell their existing home.

Lennar Corp. (www.lennar.com) often includes design features and upgrades for free instead of making them options. The company offers to pay all closing costs at some of their communities and has introduced a “peace of mind” program that protects buyers who are fearful of a job loss. The program, which lasts for two years beginning on the closing date, protects the buyers with up to six mortgage payments up to $1,800 if a homeowner loses his or her job.

At Clarksburg Village (www.clarksburgvillage.com) in Montgomery County, the developer is offering the “Clarksburg Village housing stimulus package” on many of the homes in the community by Craftstar Homes Inc. (www.craftstarhomes.com), Craftmark Homes Inc. (www.craftmarkhomes.com), Michael Harris Development (www.michaelharrishomes.com), Ryan Homes (www.ryanhomes.com) and Winchester Homes Inc. (www.winchesterhomes.com).

For first-time homebuyers, the program doubles the federal tax credit. Additional incentives include low interest rates on 30-year fixed-rate loans, closing cost assistance, low down payment requirements, free options and lease buyouts so renters can move more quickly.

For current homeowners, the community offers guaranteed leases of their existing homes, deferred settlements, closing cost assistance, free options, low down payments and low interest, 30-year fixed-rate loans. Since these buyers cannot take advantage of the first-time-homebuyer tax credit, Clarksburg Village will offer them a savings credit on the purchase of the home.

Buyers must work with a preferred lender. The program ends on April 30.

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