Large-scale recreational land developments had a major and sometimes sour impact on the vacation home market in the late 1960s and early 1970s.

There was a bigh push to sell unfinished lots and many of the buyers later found that they were unable to do anything with their land.

In some instances, developers broke their promises to complete facilities. In big recreational land developments, some buyers had a hard time selling their lots for as much as the original price. Relatively few of those lot buyers ever were able to built houses.

Since the real estate recession of 1974, new land developments have been rare. The pressurized selling tactics and problems with developers of the earlier days have been reasons for some of the lack of interest.

Aware of the sagging reputations of highly promoted recreation land developments, a trio of former land developers moved to the mountains near tiny Hedgesville, W. Va., and decided to try a new approach.

Their firm, Potomac Valley Properties Inc., had been buying mountain land wholesale, developing it with roads and utilities and selling it retail in large lot parcels. A few years ago, the company decided to get into the building business as well.

Now, Potomac Valley partners Robert Bernstein and Ray Johnston sell only lots with houses at their development, The Woods, which is about 12 miles west of Martinsburg, W.Va.

"Here at The Woods we have 400 lots on 505 acres," Johnston said. "You can see the existing recreation facilities: the pool, the two outdoor court, the playing field, the tennis court. But the major marketing fact is that we sell no lots - just houses on lots that have water, septic tanks and electricity."

Johnston and Bernstein are working on this new community full time, and have bought out the interest of their former partner, Irving Freedman. A retired Navy officer, Jack Houck, is vice president for development.Johnston, Bernstein and Houck all live in large housethat they built across the road from the entrance to their development.

"We have seen salespersons," said Bernstein, "and we are three of them . . . After three years, 166 houses on lots of about an acre each have been sold at The Woods. A dozen other houses, already sold, are being finished. Prices range from about $18,000 for an unfinished shell house - for buyers who want to do their own finishing - to nearly $50,000 for the largest model on a large lot.

Land planner Guy Rando said he selected sites at The Woods on ridges between streams to give privacy and take advantage of natural slopes. Rando, who planned the recreation and sales center area, said that he moved a house and barn to create an area for a small lake.

Johnston and Bernstein say that while The Woods was conceived as a recreation community, some of their buyers may have permanent, fulltime residence in mind for their retirement years.

On one recent Monday afternoon, when most owners were back at work or at home, Stanley and Ruth Levy of Baltimore were in their comfortably furnished, year-old mountain house at The Woods. The Levys, both of whom are professional people, said that they spend many weekends and vacations in their second home.

On a 4 1/2-acre lot, near The Woods, Craig and Gina Hall live in a house built by Potomac Valley Properties that they bought several years ago after they were married. Now they have two young children and two German shepherds.

They finished the house themselves, added a wing, and plan to add another. Craig formerly worked in the area but now commutes to his contracting capentry work in Rockville. By day, Gina is at the desk of the Martinsburg Holiday Inn.

"When we got married, we could not afford the price of housing in the Washington area and we settled here because we like the mountains and the privacy," she said. "We love it - and we can afford it." CAPTION: Picture 1, This model at "The Woods" vacation community sells for $21,400 to $32,000, Potomac Valley Properties; Picture 2, The clubhouse and sales center at "The Woods" as it appeared last winter, By Richard Stoker