Forget about all of the discount pitches from GM, Ford and other carmakers.

At least one national home builder in the Denver area is offering as much as $50,000 in incentives on some homes priced at less than $400,000.

The discounts are needed in the Denver area because the area's housing market hasn't been experiencing the red-hot appreciation seen in Las Vegas, Arizona, parts of Florida, California and big cities along the East Coast.

"The analogy to car dealers is an apt one," said Roger Reinhardt, executive vice president of the Home Builders Association of Metro Denver.

He said builders are becoming "very aggressive" when it comes to incentives, which can include below- market mortgage rates, backyard landscaping, upgraded appliances and carpets, and lower prices.

Reinhardt said the national home-building companies, which dominate the landscape, are trading profit margins for volume.

Incentives also are a way for builders to differentiate themselves from each other, he said.

"The consumer has to be the winner," Reinhardt said. He said builders weren't offering incentives five or six years ago when the Denver-area market was robust.

Not only are there more incentives in the Denver area, but premiums that were commonplace five years ago have gone by the wayside. In 2000, for example, a builder might charge a $65,000 premium on a lot with a view for a $400,000 home. Those types of huge premiums have largely disappeared, Reinhardt said.

"You don't need to offer incentives when all you have to do is plant a sign in the front yard and the home is gone," Reinhardt said. "And when we start to see some more economic recovery and job growth, and the demand starts to pick up a bit more, the incentives will be gone, too."

Donna Hess, vice president of marketing at D.R. Horton, said the most aggressive incentives typically are offered on homes that were under contract in which the deal collapsed before the home was sold and closed.

"Incentives are available for homes we want to move quickly," Hess said. "But the supply is limited. When that supply is gone, so are the incentives."

Hess agreed that when the economy picks up, incentives will disappear. There are signs that already is happening, she said.

Mike Rinner of the Genesis Group, which tracks housing along the Front Range, said Denver-area builders started offering incentives around mid-2001, when the economy was slowing because of the loss of high-paying high-tech and telecommunication jobs.

After the Sept. 11, 2001, terrorist attacks, many sales contracts collapsed, and builders began offering sweet deals to find buyers, he said.

Rinner said the incentives aren't quite as generous as they were. But they still can be found, especially along the northeast and southeast corridors, where there are a lot of homes and builders duking it out, he said.

Gary Bauer, an independent broker, has a client who is buying a $167,000 townhome from Shea Homes in Reunion, a master-planned community in Commerce City.

"At the last minute, the builder threw in another $5,000 in incentives," Bauer said. "They included an upgraded carpet, upgraded tile and a garage door opener."

Bauer said that with almost 26,000 unsold previously owned homes on the market, builders are not only competing with each other but with the resale market.

But not everyone is a believer in incentives.

Barry Grant, president of the Colorado division of KB Homes, prefers the Saturn method, where the sticker price is the actual price, with no haggling.

"We take a little different view of the market than a lot of other builders," Grant said. "We might provide some very nominal incentives, such as some slight help in the financing or in the move-in costs. But I'm a big believer that the listed sales price ought to accurately reflect the actual sales price."

In fact, Grant said that consumers should go in with their eyes wide open when evaluating incentives.

"In fact, selling a home is selling a consumer product," Grant said. "In that vein, I do believe that prices are marked up just to be marked down."

And much like buying a car that offers discounts but requires you to buy an upgraded package, the same is true with homes, he said.

"Maybe you can get $50,000 in incentives, but $10,000 of it might be for a granite kitchen counter," Grant said. "If you would be just as happy with the standard counter, maybe the discount isn't such a good deal."

But Reinhardt of the HBA said the discounts are real.

"Believe me, the incentives are squeezing the builders' margins," he said. "If you offer $50,000 in incentives, that hurts the bottom line. But like I said, they're not going to be around forever."

rebchookj@RockyMountainNews.com or 303-892-5207

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