RISMEDIA, September 10, 2007–(MCT)–Atlanta-area househunters Kendrick and Shaquita Gatewood have been courted with car leases, feted with furniture and tempted with tile. A health care worker and a teacher with secure incomes and down payment money, the couple are the toast of the Douglas County real estate market, where they plan to purchase a roomy home with a finished basement and a big yard for their two young children.
“We’ve had a really good experience,” Shaquita Gatewood said. “Everyone’s saying it’s a buyer’s market.”
Amid the roiling storm clouds of the mortgage meltdown and slumping home sales, the silver lining is the deal a qualified buyer can get now on a home.
Builders are dropping prices, dangling giveaways and slathering on upgrades to tantalize customers like the Gatewoods. For homes in the $300,000 to $600,000 range, incentives around the metro area are running from $10,000 to $25,000 or more in value.
The deals usually take the form of goods such as furniture or architectural finishes, luxuries such as cars or entertainment systems, or loan assistance ranging from several months of payment freedom to closing costs or down payment grants.
Desperate measures. Handing out freebies allows homebuilders and sellers to maintain the stated sale price of the home, which protects its long-term value, while offering some type of savings or rebate to the buyer.
Tim Randolph, president of Ross Mundy Custom Homes, offered a two-year lease on a Hummer and free gas to fuel it to lure buyers to his Magnolia Estates development in South Fulton.
He never actually had to pony up the Hummer, he said, but the gimmick worked to stimulate curiosity. Once buyers got there, they became more interested in other giveaways like granite counters and hardwood floors.
“If you can qualify for a loan, now’s a great time to buy,” Randolph said.
Earl Hunter, who has been shopping for a year to find the perfect house for himself, his bride of three months, Tamika, and his 6-year-old nephew who lives with them, visited one South Fulton subdivision that was offering a year’s lease on a Mercedes.
Throughout Atlanta, builders are offering free finished basements, media rooms, golf club memberships and airline tickets to anybody who will buy one of their homes.
Sometimes, said Shaquita Gatewood, they come on a little too strong.
“There was one subdivision where they seemed a little too anxious,” she said.
“It just seemed like something wasn’t right.”
Struggling against the carrying costs of home inventories that are climbing with contract cancellation rates as high as 40 percent, builders see the cost of incentives as necessary to staunch the drain of debt, taxes, insurance and maintenance on unsold homes that linger in the slow market.
Randolph said one of his homes can cost as much as $3,500 per month to carry on the books.
“If you’re going to have to carry that for two or three months, you might as well cut that 1/8cost3/8 now,” Randolph said. “It’s pay now or pay later.”
Awaiting a ‘perfect deal’ Greg Duriez, Atlanta division president of KB Home, said his company has adjusted its customization prices in response to the market pressures of rival builders who are touting their giveaways.
“It’s a very competitive market out there,” Duriez said.
Carl Riden, president of Redmont Homes, has seen times like these before. In fact, having been in the homebuilding business since 1973, he said he’s seen much worse.
The number of potential homebuyers looking at property remains steady, Riden said, but commitments are fewer and farther between.
“Nobody’s in a hurry to do anything,” Riden said. “There’s no sense of urgency.”
In this buyer’s market, customers like the Gatewoods and the Hunters know they don’t have to take the first good-enough house they see.
“We’re seeing a lot of people, but they’re still kicking the tires, I guess,” said Randolph of Ross Mundy.
The Gatewoods, who are renting on a lease that runs until February 2008, said they spent five months just viewing properties to get a feel for the market.
Comfortable in their condo for the time being, the Hunters are holding out for a well-built home with a side-entry garage, granite counters and a kitchen island in a diverse neighborhood with good schools for a price between $300,000 and $400,000.
“We’ve been looking for that perfect deal and that deal just hasn’t happened yet,” said Earl Hunter.
SWEETENING THE POT
Examples of incentives offered by some Georgia builders:
–Mortgage payments on your current home for up to one year.
–A two-year lease on a Hummer and free gas.
–$15,000 for upgrades, a down payment or closing costs.
–A $12,000 media room including a 103-inch movie screen.
Copyright © 2007, The Atlanta Journal-Constitution
Distributed by McClatchy-Tribune Information Services.