Office building developer Sylvan (Chick) Herman recently bought his dream house, a 12-room brick Georgian Colonial, in Kalorama Heights. But the home's kitchen and bathrooms need modernizing -- at a cost of more than $100,000. This in addition to the sales price of $950,000.

Such a story is not unusual in the city's luxury housing market where big price tags do not automatically command a house in move-in condition, with a swimming pool or, if the house is in Georgetown, even a parking space.

"I fell in love with it," Herman said of his 2310 Kalorama Rd. NW home. "I could afford it, so I brought it."

Herman is one of 15 people who have paid more than $500,000 to buy a Washington home this year. Last year, 22 such homes change hands.

And while high interest rates and escalating prices have crippled the rest of the real estate industry, the luxury home business is thriving because these buyers often don't need traditional financing. Herman, for instance, said he obtained a short-term $800,000 mortgage which he plans to pay off in less than three years.

"They are not looking for financing," said Lynn Magruder of MGMB Realty, "they're looking for what they like."

The homes they buy often come with various combinations of marble entrance halls, built-in bookcases of genuine woods, paneled libraries, double and triple-car garages, marble fireplaces, four or more bedrooms, elevators, back staircases, high ceilings, spacious living rooms for lavish gracious entertaining and rooms for live-in maids. Some are outfitted with built-in safes.

But the $500,000-plus home is just the pinnacle of the luxury housing market in Washington. For the first time, large scale developments, such as Hillendale and The Cloisters, consisting of more than 100 homes each, are under construction west of Georgetown with prices beginning at $300,000.

This market has been fueled by the large influx of lawyers, corporate lobbyists and trade association executives who have moved to Washington in the last three to five years to protect the interests of their corporate clients faced with increased government regulation or deregulation.

The city has also gained an increasing reputation for glamorous parties and cultural events that was once enjoyed only by New York and Los Angeles. aFor some a Washington address is now fashionable for a second or third home. For instance, Nolan K. Bushnell, former president of the Atari computer game company, recently bought a $642,500 three-story brick town house here simply as a second home. He lives in California.

It is difficult to generalize about the 15 people who have purchased the most expensive homes so far this year. They range from the well-known White House chief of staff James A. Baker III, who spent $715,000, and Defense Secretary Caspar Weinberger, to the virtually unknown wealthy such as Herman, Bushnell and Gunnar Plake, who arranges the buying and selling of large apartment buildings, and suburban developer Leroy Eakin III.

The realtors who sell these homes are as exclusive as their clients. They are unknown outside the monied set, although their names are often listed in the Green Book, the city's social register.

This select group includes the companies of Arnold, Bradley, Sargent, Davy and Chew; Begg; Vicki Bagley; MGMB; Jane Coyne; Dorothy C. Newman; and Michael Sullivan, whose wife is a member of the wealthy Dupont family.

Most receive the same 6 percent commission usually paid real estate agents -- but that is 6 percent of perhaps $750,000 instead of, say, $100,000.

Nearly half of the 15 homebuyers chose Kalorama, which is tucked away in the triangle formed by Rock Creek Park on the north and Massachusetts and Connecticut avenues coming to a point at Florida Avenue near the Washington Hilton Hotel.

Kalorama is a sedate 20-to-25 block neighborhood of handsome and distinguished mansions set on large yards with plentiful gardens. Kalorama owners include W. Reid Thompson, president of Potomic Electric Power Co., former World Bank president Robert McNamara, former sen. William Fulbright and philanthropist Joseph Hirshhorn.

"To have a feeling of spaciousness in the heart of the city you can't beat Kalorama," said Dorothy C. Newman, an agent who works alone out of her home there. The community is within walking distance of Dupont Circle and posh city restaurants and has the added security of the U.S. Protective Service, which guards the embassies that dominate the neighborhood.

The new Kalorama owners include Weinberger, who bought an 11-room three-story, beige-brick, modified French provincial home with a flat front, shuttered windows and mansard roof at 2330 California St. NW for $707,000. The four-year-old home has six bedrooms, five baths, a one-car garage, central air conditioning, patio, but no basement and no pool.

A mystery owner has purchased the most expensive house sold this year. Listing only as the South Pasadena Investment Corp., a company chartered in the Netherlands Antilles, a group of Caribbean islands, the owner bought a stately brick mansion at 2409 Wyoming Ave. NW.

It features include a marble-floored library, a courtyard with a fountain, an elevator, a balcony off the master bedroom, a massage room on the third floor, an enclosed swimming pool and an elaborate security system. The price: $1.2 million.

Reagan chief of staff Baker chose to live in Spring Valley because he wanted a wooded lot. He bought 2415 Foxhall Rd. NW for $715,000.

Spring Valley and Wesley Heights, located generally north of Glover Archbold Park between Massachusetts Avenue and the Potomac River, were the city's first large high-priced subdivisions built after World War II. Blacks and Jews were not allowed to buy the palatial, estate-like homes until the early 1960s.

Across from the Baker home, the former estate of the late Nelson A. Rockefeller is becoming Foxhall Crescents, a new development of about 100 custom-built homes priced from $457,000 to $828,000.

The homes feature two marbled entrance foyers, a micro-wave oven and grill built into the bar, a choice of various woods and styles for all bookcases, and eight-foot windows in the rear of the homes. Owners have their choice of handpainted Sherle Wagner porcelain wash basins with 14 carat gold fittings. Platinum or gold washbasins are extra.

A few blocks away a young couple from New York recently bought a 12-room gray-brick colonial home for $550,000. They could afford it only because they sold their cooperative in downtown Manhattan for almost an equal amount.

"The only way we could afford buying this house is because of the significant appreciation we realized from our apartment that we had for three years," said the wife, who asked not to be identified fearing that her husband's mid-level government job would be jeopardized if it became widely known that they had brought so expensive a home.

The house came with a half acre, four fireplaces, a library, a receiving room adjoining the large living room at a patio. But the central air conditioning, at least one of the fireplaces and maybe more, plus the kitchen oven do not work. The couple installed chandeliers, which were lacking, and spent nearly $10,000 repairing a retaining wall.

"Our friends are astounded that there are so many things that need repairing, because they know it is a wealthy neighborhood," the woman said with a laugh.

Dorette and George Seignious recently returned to Washington after living in South Carolina for a short time and found house prices that "shocked me because they had gone up so much," said Seignious, former director of the U.S. Arms Control and Disarmanment Commission. His wife is from the wealthy Fleischmann margarine family.

But they were willing to pay $550,000 for a vintage Federal-style, three-floor Georgetown town house with a flat, unadorned brick front and no off-street parking so they could be near Georgetown's restaurants and shops.

Despite the emerging popularity of areas other than Georgetown, Plake, an investment banker specializing in apartment sales, shares the Seignious' views about that traditionally affluent section of the city. He sold his large Foxhall Road home to Baker and moved to a smaller and less expensive Georgetown address.

"We wanted the location and the convenience," he said. "We think Georgetown is the ultimate place to be." CAPTION: Picture, Building developer Sylvan Herman bought this luxury home at 2310 Kalorama Rd. NW for $950,000, and it's in need of $100,000 in kitchen and bath renovations. By Margaret Thomas -- The Washington Post; Map, no caption, The Washington Post