Condo Developers Sweeten The Bait

Soon after Bryan O'Keefe popped the big question to his girlfriend, Kimberly Hall, the newly engaged couple began looking for a home to call their own.

They quickly spotted a two-bedroom condominium they liked at the Four Winds at Oakton for $345,000, about $30,000 less than the original asking price. The deal got even sweeter when the developer offered to give back 6 percent of the sales price, or about $20,700, which the couple used to pay closing costs and other fees.

And the concessions kept coming -- even after they signed a contract in October.

"That's when they called to say they lowered the price on our unit and they gave us a $5,000 price reduction, just like that," said O'Keefe, 25, a writer and researcher at a District-based think tank.

With tens of thousands of new condos entering the market, some developers are moving beyond luxury cars, plasma televisions and other inducements to lure buyers. Instead, they're starting to negotiate the base price of homes, a tactic unimaginable during the condo-selling frenzy of recent years, when developers scoffed at offers below the asking price.

"There's now an offer/counteroffer mentality, a back and forth," said David Mayhood, president of Mayhood, a McLean firm that has marketed condos since 1983. "That would have been unheard of as recently as six months ago."

The developers who are reducing prices say they are doing it to buck up the confidence of a large pool of jittery would-be buyers. After all, they say, the economy is sound, jobs are plentiful and interest rates are low.

The price of new condos fell 4.6 percent in the District and 2.6 percent in Northern Virginia in the third quarter of this year compared with the same period a year ago, according to real estate information firm Delta Associates. Only in Maryland, where the supply of new condos is relatively low, did prices climb, increasing 5.3 percent.

But many condo units remain to be sold. At this point, if no other condos were added to the market, it would take another three years to sell them all, and builders are eager to find buyers for the units already available. There are also thousands of units available for resale by their owners.

Against that backdrop, O'Keefe struck his deal at the Four Winds, a 366-unit complex Orion Residential converted from apartments. Orion released about 260 units for sale in September 2005, soon after the condo market started softening, and reduced prices this fall, said Dan Gumbiner, the company's president and chief executive.

"The market was adjusting, and we adjusted with it," Gumbiner said. "We retooled our marketing approach and our pricing schedule. . . . [For us] to remain competitive, people needed to feel that we weren't taking advantage of them."

The strategy appears to be working, Gumbiner said. Orion has sold about 130 of its units so far and closed on roughly 105. It has slowly increased prices again, but not to their starting levels.