Are you tired of living in a rental in Philadelphia? Would you rather see your monthly payments benefit you in the future rather than disappear forever into the landlord’s hands? Buying a home in the City of Brotherly Love is a great investment because your mortgage payments build equity in the property, which can be used to make more money at the sale or for a cash-out refinance.
The concern for many new buyers is the cost of buying a home. Right now, the average price of a residential single-family home in the city is about $220,000. Very few people have that kind of money lying around, which means you have to take out a big loan to purchase your house.
The trick is understanding if the home you want is being listed for a fair price. Sellers want a profit when they offload their home, so they will look for every opportunity to raise the price. Some strategies are fair, while others could be considered unjustified. Let’s take a look at some factors that can make homes more expensive.
One of the biggest mistakes that sellers make when trying to sell a home is overestimating the actual property value. This is especially true for sellers who have lived in their homes for a long time. They attach a certain amount of sentimental value to the home that does not reflect its actual cost. Sometimes, this leads to fewer buyers making offers on the home because people recognize that it is not a fair value. This decision-making will only pay off if a buyer does not do much research into the fairness of a listing price. Watch out for homes being sold by long-time owners that may have an inflated listing price due to sentimentality.
Smart Home Features
Not all reasons for a more expensive home are unjustified. Owners who have made improvements often do so to raise the value of their properties so that they can appeal to more buyers and fetch a higher price. One strategy involves smart home upgrades. These are systems that function more efficiently to lower utility costs while also making features in the home easier to control. For example, smart home security systems can be remotely managed even while you are traveling. Thermostats can be connected via Wi-Fi so you can ensure HVAC systems conserve energy while you are out of the house. Smart cameras can help you see who is at the door from your mobile phone. These systems are highly coveted in 2023 homes, so expect a higher listing price if the property you want has them.
Another major factor that affects pricing is the location of the property. Some specific markets within the city have far more value on average than others. For example, buying one of Mainline Philly homes is going to require a lot more money than many of the other neighborhoods in the metropolitan area. If you are not sure that the price of the home you want is comparable to nearby houses, browse for other listings in the neighborhood to see if there is a gap. If you notice that other homes are less expensive, then the owner may be overestimating the true value of the property. Conversely, a home that costs much less than neighboring properties may have something wrong with it.
Renewable Energy Sources
Renewable energy is very trendy in real estate markets across the country, and Philadelphia is no exception. Homeowners can experience multiple benefits by investing in renewable energy sources like solar panels or windmills, including tax credits, lower utility costs, and higher property value. If the home you want to buy has some form of renewable energy source, then that will probably be reflected in the listing price. Some buyers are willing to pay more for these features, so be prepared to compete with others and for a bidding war to potentially raise the price.
No Major Maintenance Issues
Homes that are well cared for can fetch a higher price from buyers. That is because buyers are already spending a lot of money to purchase the home, so they want to see that repair costs will be limited early on. If a home is selling for higher than other comparable properties, one of the reasons could be that there are few, if any, maintenance costs expected to occur soon. Often, you have to wait until the inspection report to see if the price of a home can be negotiated based on maintenance needs.
The Solution is Research
If you want to get the fairest deal possible, then research is the key. The more you learn about the property, the values of the surrounding home, and the needs of the seller, the easier it will be to determine if the listing price is a good deal. The factors listed above can raise the price, whether it is justified or not. Pay attention to the details and work with your realtor to find a good deal on your first Philadelphia home.