Selling Luxe In a Time Of Struggle

This week, company officials said that more contracts were canceled last quarter than in the previous quarter (30.2 percent vs. 19.4 percent) and that the canceled contracts were for more expensive homes ($785,000 on average vs. $606,000). They predicted that the trend would continue without additional federal assistance to the industry.

Aside from lobbying for government intervention, Toll's strategy has been to dangle the goodies: extra square footage, upgraded kitchens and baths, centralized technology systems. Its model homes are chock full of add-ons.

Incentives "do make a difference, although they have made less of a difference in October than they had made in July, August or September," Toll said this week in a conference call with investors. "We will continue running promotions."

This is bringing potential buyers in. But their checkbooks are remaining in their pockets. Many assume that the longer they wait, the more likely that they will be able to buy for less.

"The basement really has to be spectacular," said Kimberly Brown, who was admiring the three-tiered theater in the lower level of the Hopewell model home. Tricked-out basements are a Toll specialty. The lower level of one in the starter-home line at Marlboro Ridge is decked out like a jazz club. It has brick archways, a stepped-up stage, plush armchairs arranged around a cocktail table and a grotto-like feel. Another is designed as a billiard and game room. A third has a casino theme, with card table, bar and TV lounge.

Toll has been more aggressive than other builders in trying to maintain its list prices, according to analyst Megan McGrath of Barclays Capital Research, and has been successful to the degree that the decline in its average home sales price has been smaller than for other builders.

But to maintain cash flow, builders need to sell. And so Toll, which in the past has rationed promotional offers, has become more generous with enticements. Its models showcase the offerings.

Even before the market began to decline, Toll had planned to load up the Marlboro Ridge models with options. In the Malvern, the premier model in the Estates line, the entrance foyer leads to a two-story dining room rotunda. Upstairs, the marble-clad master bathroom leads into the bedroom with an Asian-style crosshatch of dark wooden beams accenting coffered ceilings.

Jeanette Tolbert is retired, getting married and looking to buy in the next year. She admires the wrought-iron staircase in one model home, its gourmet kitchen and the lounge off the dining room where a baby grand sits next to a bar overlooking the woods.

"What a wonderful place for entertaining," Tolbert said to her friend, Tammy Rogers. "I love it and all, but I'm going to wait for the prices to go down, and then I will buy."

Downstairs, Brian Richardson has brought his family, visiting from Texas, while he looks for a new place. The single consultant works from his 5,000-square-foot house nearby and is looking for a new house, he said, because he would like to have a dedicated home office, which he doesn't have now.

He looked at Marlboro Ridge two years ago when he was getting ready to buy, but the project had just broken ground that spring, and he wanted to move more quickly. He bought elsewhere.