Townhome Luxury Options a Hit

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Don Larkin of D.M. Larkin Communities Inc. went against conventional wisdom when he decided to model as many options as he could in his most recent townhome community in York Pa.

January 01, 2000

Don Larkin of D.M. Larkin Communities Inc., went against conventional wisdom when he decided to model as many options as he could in his most recent townhome community in York, Pa. And it is paying off.

With base prices ranging from $92,000 to $114,000 for 1256 and 3300 square feet of living space, the average selling price has been $134,000. One person even purchased enough options and upgrades to more than double the base price of the home.

But this goes counter to the thinking of many builders who keep the number of options in their models to a minimum to avoid scaring off potential home buyers-especially those first time buyers who were the original target market for this development. In the end, many "active empty nesters" were attracted to Tyler’s Harvest.

"Our original market analysis said it would be first time home buyers at an average sale price of $95,000 with $5000 in options," says Larkin. "We ended up with active adults that were quick to load up with the options."

This Breckenridge model home at D.M. Larkin Communities’ Tyler’s Harvest community in York, Pa., has a base price of $114,990 with garage. Four optional bay windows were $2300 each and the optional portico porch was $2995. This Vail model home had a base price of $92,990 without a garage. Options included a brick front for $3225, a box bay window for $1800 and a covered short porch for $975.

Larkin says the project has been a hit from the time it opened in May, selling 36 of 78 units by early October of last year-an absorption rate twice that of similar communities in the area. He attributes the company’s success at selling options to a number of important factors. First, Larkin conducted a thorough round of focus groups and found that buyers were interested in luxury options, even in low to moderately priced homes. Secondly, Larkin offered his sales staff commissions that are three times their normal level on options. Then, he put a long list of options in the models.

"In most cases, people will not buy what they cannot see,’’ says Larkin. "They need to see, feel and touch these things before they are willing to buy."

And, when buyers ask for options that Larkin does not offer, this builder usually finds a way to accommodate them and subsequently to add that option to its list as well. For example, the buyer who doubled the price of his town home wanted Corian counter tops in the kitchen. Soon others had the option of buying that brand of counter tops as well.

Some of the higher-margin options ended up being the most popular. More than 50% of the Tyler’s Harvest buyers have added gas fireplaces with marble surrounds. About the same percentage added recessed lighting in various parts of their homes. Finally, Larkin has done well by offering to convert bonus space into a super-sized, luxurious bathroom including tubs with water jets.

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