There may never be a better time to sell your home. All indicators point towards 2021 being one of the hottest markets in history for Philadelphia real estate. Supply is low. Demand is high. But before you take the leap, we want to give you tips and guidelines to avoid costly mistakes.

Understanding the Market

In February 2021, a record 5,040 homes sold in Philadelphia, as the median sales price rose by nearly $30K and properties came under contract in two weeks. The average single-family home price rose to $315,000. The last time that Philadelphia saw such large double-digit appreciation was in 2006.

In a recent Inquirer article, Drexel University economist Kevin Gillen explains, “This is the first time that the supply of homes for sale in Philly has dropped below 3,000. Historically, the city has an average of 7,400 houses listed for sale in a given month.”

Meanwhile, mortgage rates are low and housing prices are rising. The hottest markets are in West and Southwest Philadelphia, where prices have risen by 22%. Single-family homes rose an average of $40,000. Buyers paying tens of thousands of dollars over listing prices to win bidding wars. Properties come under contract within two weeks. And buyers are paying cash.

According to Forbes, Millennials are driving the housing market. Older Millennials are trade-up buyers, while the larger, younger segment are buying their first home.  Competition is highest at the lower end of the price spectrum, where first-time buyers tend to shop. So-called “starter homes” are in high demand but short supply these days. If you live in one and are ready to upgrade to a larger home or trendier neighborhood, the stars are in your favor. 

Before you put your house on the market

Selling a home is easy. But buying one may prove frustrating and take more time and money than you imagined. Thinking of the burbs? Montgomery County has the lowest number of listings in 15 years. You will be competing against New Yorkers who are shelling out $2 million for a two-bedroom condo. (Case in point: the sky-high pricing at Center City’s 47-Story condo ArtHaus.) 

Before selling your home, take a pencil to your mortgage, especially if you refinanced it in the last twelve months. A Wall Street Journal article advises, “It often takes a year or more to recover the costs associated with refinancing. When someone is refinancing, they should go through the thought experiment of: “Can I stay in this house long enough to make it worth it?”

Advice from an agent

“The idea of a buyer’s market and a seller’s market is a little misleading,” said Solo Real Estate agent Alejandro Franqui.  “Right now, the only sellers who will really do well are people who are selling an investment property or something they inherited.”

“However, if you’re looking to sell your own home, you’re probably going to have to buy another one and there is very little available,” he cautions. “You may get a great price for the home you live in now, but you’ll likely have to get into a bidding war and pay top dollar for your next house.”

Cash is King

Choosing a cash buyer has several benefits for sellers. Cash sales can take as little as 14 days, while mortgage closings usually take 30 to 60 days. In many cases, sellers are open to allowing buyers to bring in a home inspector before they make an offer. CNBC reports that cash sales for homes in the $100,000-$200,000 make up 36% of sales.

However, there is not a lot of risk taking an offer from a buyer who’s getting a loan from a conventional lender as long as you do your due diligence. That means calling up the lender and asking how qualified the buyer is. This is where having an agent can take the angst out of selling a home. Be aware, loans backed by the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) have more restrictions and may require you to make home repairs before the sale is final.

Choosing the best offer requires more than a pocket calculator. You need to compare the offers side-by-side, including offer price, loan amount, type of loan, contingencies, and other factors. Again, this is where having an experienced agent is crucial. 

Whether you’re thinking of selling your investment property or your family home, our Solo agents can give you advice and find the best approach for you in the current market.

Looking to sell your home or investment property? We can help! Learn more about our selling services here, and contact us for more information.