Inspections and appraisals can be a huge part of the process when selling your house in Philadelphia. Real estate transactions can be quite complicated, so it is important to understand the process in order to make the best financial decisions.
Did you know that one of the main reasons houses don’t sell? It’s because they don’t pass inspection or the buyer can’t get funding based on the condition of the property.
And don’t forget the average cost to repair or remodel in Philadelphia can very very EXPENSIVE!
Read on to find out what home sellers need to know about inspections and appraisals in Philadelphia.
Contingencies
Home sellers need to know inspections and appraisals are an intricate part of traditional real estate contracts. These contracts typically have an inspection contingency or due diligence contingency. This allows protection for buyers, who are given a specific time period, such as seven days for the inspection to be completed.
Should there be any issues found with the in Philadelphia, the options for both buyer and seller are clearly outlined in the contract. Depending on how the contingency clause was written, the outcome of the inspection could cause closings to be delayed, or even cause deals to fall through.
This is why most people who own a property that needs a lot of work tend to work with local cash home buyers. Home cash buyers like Philly Home Investor usually have very few contingencies outline in the contract. Making it less likely that a deal won’t go through.
Failure to have this clause in a contract could mean that the buyer, having decided not to complete the purchase based on the outcome of the inspection, would lose their earnest money deposit, which shows interest and good faith to make the purchase.
Repair Expenses
Much news is brought to light for homeowners from having inspections and appraisals. These are typical processes of real estate transactions. Home inspections focus on the condition of the property structurally, as well as the systems which keep the home a comfortable and enjoyable property.
This includes items such as air conditioning, heating, plumbing, electrical systems, water damage, termites, and the condition of the roof and foundation. The inspector will prepare a report for the buyers, to make them aware of any issues that were found.
Depending on the conditions in the contract, after a negative report, buyers may have the option to request a time period for a second inspection, or even request a deduction on the price, to make the repairs themselves, the cost for the repairs is likely to fall on the seller’s head.
It is wise to contact three professionals for estimates to get a realistic number as well as a timeline for completion. These out of pocket expenses can quite literally run into tens of thousands of dollars, depending on the severity of the problems found in the inspection.
The average cost of repair or remodeling in the Philadelphia region can be anywhere from $5,000 to-40,000 depending on the job or renovation.
Valuation
Inspections and appraisals also bring into focus the actual current market value of the home, given all possible variables. While the inspection focuses on issues with the home, the appraisal is completed by taking several variables into account, including comparing properties that have most recently sold, that are most likely, and most near the subject property. Appraisers have predetermined values for bedrooms, bathrooms, and the like.
They will add value to a property with more features than the comparable properties, or subtract from the subject property value for what may be lacking, such as having only a one-car garage, when those nearest all have two-car garages.
In Philadelphia, this is done by comparing your home to other homes that are no further than 0.25 miles away. It May sound strange but in Philadelphia, like other major cities, comparable comps are done “block by block” unlike in the burbs.
So you can literally have various different home values all in the same area.
Mortgage lenders necessarily require the appraisal to meet the loan-to-value (LTV) ratio. Basically, the mortgage amount is divided by the appraised value. Lenders use this measurement as a guideline, the lower the resulting number, the lower the risk on the loan.
Should the loan-to-value be a higher number, the lender may require mortgage insurance to be purchased as well. Wise buyers will ensure that there is a contingency clause in the contract based on the appraisal results as well.
Deal Breakers
Failing to understand the impact of inspections and appraisals in Philadelphia can lead to disastrous mistakes which can end up costing a home seller valuable time and a great deal of money. Sadly, buyers may find their house isn’t worth what they thought only after the inspection and appraisal have been completed.
The real-time it takes to sell a property with a real estate agent on the MLS in Philadelphia is about 59-69 days. And that’s if everything goes right.
With these and many other clauses that can be in place to protect buyers, problems may cause sales to fall through because the lender will not approve the loan. The buyer may ask the seller to pay for repairs, out of pocket, before closing or to deduct the value of the repairs from the price of the home and renegotiate a contract.
All the while, the clock keeps ticking and the seller is now paying to hold the property longer than expected, meaning that in reality, they are losing even more of the valuable equity that had been built in the home, and actually making even less on the sale.
Philly Home Investor makes real estate transactions easy, even for first-time buyers or sellers, without any of the problems that accompany inspections and appraisals in Philadelphia. At Philly Home Investor our network of professionals will lay out a plan to save valuable time and avoid what could potentially be thousands of dollars in repairs.
A professional buyer’s purpose is to solve problems for buyers or sellers, so why not let a professional buyer, like those at Philly Home Investor, guide you step by step through the process? Send us a message or give us a call today to learn more! (215) 422-3288
Take a look at our Google reviews, there is a reason we have nothing but 5-star reviews. We really make the process of selling your home fast in Philadelphia simply and easy.
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