When it comes to selling your home, one question looms large: What's next for you?
Before you make a decision, it's important to consider the challenges you might encounter as a buyer. It's also crucial to assess your space requirements for a new home. While downsizing may be relatively straightforward, if you're looking for a similar-sized property, keep in mind that housing prices have been rising holding steady in some markets and dropping up to 10% in others. Rates are on the rise as well, so if you can put 20% down, you’re in a better position to refinance later when they drop.
Selling your current house while searching for a new one requires careful planning. What if your home sells before you find another? Are you willing to incur additional costs for short-term rentals, or would you consider asking the buyer for an extended stay? Moreover, what happens if you find your dream home but haven't secured a buyer for your current one?
Once you've addressed these questions, it's time to prepare your home for sale. If you’re not confident with the answers to some of the questions above, I can help. More on that later.
Preparing Your Home for Sale in Philadelphia
Your Pennsylvania home may have served you and your family well, but what will potential buyers think? Before listing, ask yourself these three essential questions:
Is it worthwhile to upgrade your home before selling? If you're considering major renovations to increase your selling price, think twice. Remodeling projects rarely recoup their full costs at resale. For example, a $28,000 kitchen remodel may only yield a $20,000 increase in the selling price, according to Remodeling magazine. Instead, focus on cost-effective improvements that can enhance your home's value.
What repairs should you address before selling? Put yourself in the shoes of a potential buyer touring your home. Are there noticeable issues that could discourage someone from purchasing a property with a hefty price tag? Peeling paint, evidence of water leaks, and cracked floorboards should be addressed before welcoming buyers inside. However, not every problem requires fixing. Outdated appliances or old windows, for instance, fall into the category of things you need not repair before selling.
Should you stage your home? Home staging is akin to dressing up for a date—first impressions matter. If your house is cluttered or completely empty after moving out, investing in staging services can make a significant difference. While costs vary based on your requirements, staging can potentially fetch a higher price. In fact, staged homes in 2021 sold for approximately $40,000 more than their list price, according to the Real Estate Staging Association. A great realtor will include digital staging or recommendations for decluttering your space as is before listing online.
Timing Your Sale in Pennsylvania
According to Redfin data, early summer has proven to be the best time to sell a house in Pennsylvania for the past two years. In June 2021, homes spent an average of 22 days on the market, decreasing to just 20 days in June 2022. Conversely, the winter months tend to see homes lingering longer on the market due to reduced buyer activity. Currently in Philadelphia the average days on market (dom) is 60, but in the suburban Main Line markets its around 5-20 dom.
Find a Local Philadelphia and Main Line Realtor
While data can offer insights into the optimal time to sell, navigating the process alone can be challenging. It's wise to find a real estate agent with a deep understanding of the local market. Given Philadelphia and the Main Line’s vast size, statewide figures won't capture the nuances of selling in specific regions like Lower Merion or Rittenhouse Square. When selecting an agent, keep these two key points in mind:
Firstly, dual agency is permitted in Pennsylvania, meaning an agent, or brokerage, can legally represent both you as the seller and a potential buyer. However, you have the right to decline dual agency and must provide written consent if you choose to proceed.
Secondly, expertise comes at a cost. Realtor fees typically amount to 3 percent of the purchase price for both your agent and the buyer's agent, with the seller covering both fees at 6% of the sale price. Although it may seem substantial, working with an agent can likely secure you a significantly higher selling price than if you were to sell independently. Recent data from the National Association of Realtors indicates that owner-sold properties averaged $260,000, while agent-assisted sales typically achieved $318,000. It's worth noting that agent fees can be negotiable, particularly for higher-priced properties. And experienced agents can negotiate and agreement to save costs elsewhere like in tax fees.
For sellers in the Philadelphia area, it's crucial to discuss with your agent how to attract buyers from neighboring suburbs, Delaware, and New Jersey, given the competitive nature of the metropolitan region. A skilled agent will know how to entice buyers to consider properties on the Pennsylvania side of the border.
Pricing Your Philadelphia Home Competitively
Choosing the right asking price involves attracting the maximum number of potential buyers. Follow these steps to establish an effective pricing strategy:
Conduct online research to estimate your home's worth. Best to have your agent do a comparable market analysis to get what we call a home evaluation.
Analyze comparable properties in your area to determine recent sale prices, providing a more accurate understanding of the local market.
Consider broader economic factors. Although Pennsylvania remains a seller's market, it's essential to factor in national trends such as increased mortgage rates and economic uncertainties that may affect buyers. Be strategic in pricing your home to facilitate a successful sale. Statistics show listing at market value or slightly lower yields a higher sale price with competitive offers verses a high list price that you may need to keep lowering to attract attention.
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Documents and Disclosures in Pennsylvania
Pennsylvania law requires sellers to complete a property disclosure statement, providing details about any defects that could impact the property's value, such as water leaks, termite damage, or electrical issues. Additionally, if the property is part of a condo or co-op, you must provide relevant documents pertaining to the building, homeowners association, and bylaws for potential buyers to review and follow.
Need to Sell Your Philadelphia Home Quickly?
If time is of the essence, there are alternative routes to expedite the selling process beyond a traditional sale:
Explore Wholesaling: Although major iBuying companies like Opendoor and Offerpad do not operate in Pennsylvania, you can investigate services from a realtor on wholesaling. Essentially the agent can put your home under contract at an agreed upon price, and sell the contract to an end buyer for a fee. This program aims to attract multiple investors to submit offers for your property. Keep in mind that these offers may be lower than what you'd receive on the open market, albeit usually without any contingencies.
Consider selling for cash: Selling your home to a real estate investment company for cash can be an ideal option if your property requires significant repairs or if you need a quick infusion of funds. While you may receive a slightly lower amount, the speed of the transaction can outweigh the difference.
Enhance curb appeal: Simple actions like painting the front door, power washing the driveway, or adding fresh flowers can greatly enhance the visual appeal of your home. A welcoming exterior encourages potential buyers to make an offer. These improvements can be completed within a couple of days without the need for a contractor.
Closing Your Philadelphia Home Sale
When the sale is ready to close, it's essential to prepare for the associated costs. While you aim to profit from the sale, several expenses need to be accounted for. The most significant cost is typically the commission paid to the real estate agents involved in the transaction, which usually amounts to 6 percent of the sale price. Unlike the buyer, you as the seller are responsible for paying real estate fees. Sometimes, this can be negotiated by your broker.
Closing Costs in Pennsylvania
After accounting for the Realtor fees, here are some additional expenses to consider during your closing budgeting process. Don't forget to allocate funds for moving fees as well, as they are essential but separate from closing costs. Local moves may incur minimal expenses, but long-distance relocations can significantly impact your budget.
Transfer taxes: Pennsylvania charges a 1 percent real estate transfer tax at both the state and local levels, typically split between the seller and the buyer. Philadelphia charges an additional 3.278% on top of this. So 2-4.14% is common. Allocate 2 percent of the purchase price as a starting point, and consult your agent for potential additional fees based on where you’re located.
Seller concessions: Be prepared to cover some of the buyer's closing costs if their home inspection uncovers any issues. Seller concessions are a standard part of many real estate transactions, and while not obligatory, it's common to negotiate this during the offer or after inspections.
Attorney fees: While not mandatory in PA, hiring a real estate attorney is a wise decision for a complex and high-value transaction like selling a multi-family home or larger investment property. A broker who has sold multimillion dollar private homes and commercial properties will be able to draft documents and negotiate this in PA. Not all agents have this experience, luckily for you, Kathryn Blessington at Philly Proper does ;)
Title insurance: In Pennsylvania, buyers typically bear the cost of title insurance, which offers protection against any title-related issues. As a seller, you may not need to allocate funds specifically for this expense. Sometimes conveyancing fees or deed processing costs are paid.
By considering these factors and working with a knowledgeable real estate agent, you can navigate the process of selling your home in Philadelphia or the Main Line more effectively and maximize your chances of a successful sale.
