Buy it Now: Builders look to move homes at year’s end

Buying a new home during the autumn can be a smart move for prospective buyers.

“This is the fourth quarter for most builders and they need to look at their inventory in a strategic way,” said Gail Payonk, director of sales and marketing for Next Generation Development.

NGD recently opened the Hamptons of Hinsdale, a luxury townhouse and condominium community.

“Builders — particularly multifamily builders — want to move inventory off their books so they don’t have to carry it through the winter. Carrying (inventory) costs an average $150 per day per unit, including insurance, taxes and interest on construction loans,” she said.

“And when there is a homeowners association involved, they want as many homeowners as possible contributing to help pay for snow removal,” Payonk added. “This is our last big push of the year.”

The Hamptons of Hinsdale now has three soon-to-be-finished luxury townhouses available with big purchase incentives. They range in size from 2,473 to 2,817 square feet and feature cherry floors, granite countertops, designer lighting and more. While these townhouses usually list for $689,000 to 722,000, with the current sales incentives they range from $639,000 to $707,000.

“These aren’t cookie-cutter townhomes with standard builder specs,” Payonk said. “These are truly designer-finished homes decked out with the most in-demand features, including fireplaces, bamboo flooring, high-end lighting fixtures, glass tile, and top-of-the-line paint. An extreme amount of care and attention to detail was invested in all three units, and each features a distinctively personalized floor plan. Plus, they’re set in a fantastic location in the first finished townhome building facing the community’s beautiful gazebo.”

There are no other new construction townhouse or condominium developments in Hinsdale, Payonk said. The closest comparable community is at least 17 years old, so this is a rare opportunity, she said.

Andy Konovodoff, president of K. Hovnanian Homes in Chicago, agrees there is a cost advantage to buying near the end of the year.

“The end of October is the end of the fiscal year for six or seven large public builders, but even when we get past October, if we can, we want to move our already-built homes before the bad weather comes in,” he said.

“Our inventory is very lean, but we always make sure we have one or two homes in each community that can be finished within five weeks. Right now we have an average of two of those homes available in each of our nine communities and they range in price from $225,000 to $290,000,” Konovodoff said.

“We are expecting some price appreciation in 2012, so these prices should be very tempting,” he added. Konovodoff doesn’t foresee any increase in mortgage interest rates in the foreseeable future, however.

K. Hovnanian is building in Elgin, Oswego, Wauconda, Mundelein, Volo, North Aurora, Glen Ellyn and St. Charles.

While private builders are not “as much a slave to the end of the fiscal year as national builders are,” said Jeff Benach, president of Lexington Homes, “they may still have an incentive to sell now.” For example, local builders may have a construction loan they need to pay off.

“Generally, August is slow because people are on vacation and they are taking kids back to school,” Benach said. “Then things heat up in September and October before they slow down for November, December and January when people are busy with the holidays. So builders naturally want to sell as many homes as they can while they are still in the selling season.”

Lexington Homes has announced a five-choice incentive program for fall homebuyers at its Lexington Park townhouse community in Des Plaines.

Homebuyers can choose up to 12 months of mortgage payments paid by Lexington Homes; or 50-percent off on all options and upgrades with no limit; or a mortgage rate buy down (first year in the mid to upper 1-percent range, second year in the 2-percent range, and years three through 30, never higher than 3.875 percent); or enrollment in the Marketplace Homes program, which provides a guaranteed lease on a buyer’s existing home for up to six years; or all closing costs, property taxes and association fees paid for one year.

“We’re offering buyers an impressive menu of choices to help make it possible for them to purchase a home,” Benach said. “Many people right now want to move but may not have the available funds for all the upgrades they would like or to pay for closing costs, for example. These incentives are designed to help those buyers make the move now and not have to wait to get the home they want. We can even mix and match these incentives to create a package of what buyers need most.”

R. Franczak and Associates are taking a different approach at the Heritage of Palatine condominium development in downtown Palatine.

Sales manager Katie Campbell said Franczak is offering the new rent-to-buy program on the four remaining builder models at the community.

“This is an ideal program for first-time buyers who are yearning to buy a luxury condominium, but are short on down payment cash because of the economy,” said Campbell. “These condominiums feature top-of-the-line appliances and upgraded finishes. Renters looking to own a home should come and preview these spectacular units.”

The four decorated model homes offer 2-bedroom and 2-bedroom-plus-den floor plans with custom cabinets, granite counters, wood floors, stainless steel appliances, large master suites and an abundance of closet space.

“Rent for the 2-bedroom plans is $1,850 a month and the 2-bedroom-plus-den rents for $1,950 a month,” Campbell said. “If renters sign up for the rent-to-buy plan, $500 of the monthly rent will be escrowed to go toward purchasing the condominium at the end of the lease.”

“Our rent-to-buy program helps prospective condo buyers save $6,000 in down payment cash while they reside in a luxury condominium for a year and effectively pay between $1,350 and $1,450 a month in actual rent,” said Campbell.

Realtors say those searching for a resale home would also be smart to shop this fall, especially with the brutal winter that is being predicted.

“Those who have vacant homes, in particular, are going to want to sell them before they have to deal with shoveling snow and frozen pipes, especially with the type of winter they are predicting,” said Bill Farrell of Re/MAX Suburban in Mount Prospect.

It is a buyer’s market for vacant homes and sellers are going to be more likely to accept offers now than when the weather improves in the spring.

However, Tony Massaro, tax partner with Porte Brown, an Elk Grove-based accounting firm, said those buying a home at this time of year should not expect a big benefit when they file their income taxes in April. That will be delayed until the next year’s taxes are filed.

“Real estate taxes in Illinois are paid a year behind and the seller would give you a credit on your closing statement anyway, so you wouldn’t get any deduction this year for those. In addition, at the most, you would make two mortgage payments, which wouldn’t be enough (home interest expense) to get you over the standard deduction,” Massaro said. “Pretty much, that happens to anyone who buys a home in the second half of a year.”

And while you can deduct points paid to buy down a mortgage, few people are really doing that right now, he said, because interest rates are already so low.

But on your 2012 federal taxes you would be able to deduct all of your mortgage interest payments. While Illinois doesn’t allow a homeowners’ deduction for mortgage interest, it does allow homeowners to take a 5 percent credit against real estate taxes paid and “that is a direct reduction of your tax liability,” Massaro said.

Some energy credits are still available this year from the federal government. If you buy a used home and replace the doors or windows with energy-efficient products, or make other approved energy upgrades, you may qualify for up to a $500 credit on your income tax return. However, these home improvements must be completed by the end of 2011 to qualify.

“Many people are not selling their homes right now because they feel that it isn’t worth what it should be,” Massaro said. “But they need to realize that they will be getting a comparable bargain on whatever they buy. Once people realize that, I think that things will open up again and the real estate market will improve.”