Buying Your First Home in Philadelphia - A Guide for First-Time Buyers

Buying your first home is a major milestone. You’ve worked hard, saved, and hopefully done some basic research to get started on your home buying journey.

To help with the process, we’ve created a quick guide for buying your first home in Philadelphia. It outlines a few non-negotiable key steps, as well as advice for standing out in a competitive real estate market.

Learn what to expect when buying your first home in Philadelphia and how to increase your chances of getting an offer accepted with the step-by-step first-time buyer's guide Philadelphia homebuyers can use below.

Getting Pre-Approved for a Mortgage in Philadelphia

Beginning a home search is an exciting time for first-time home buyers in Philadelphia. Before you start scouting and touring properties, however, head to the bank and apply for a mortgage pre-approval.

You may think you know your budget, but in reality it might be higher or lower than you realize. There are a number of factors that determine loan amounts, so it always makes sense to speak with lenders early on before deciding on a budget.

It’s also important to note that many real estate agents won’t work with buyers unless they have a pre-approval in hand. As a first-time buyer, taking this step will show that you’re serious about the process and ready to make the move.

You’ll need to provide your last few years’ worth of tax returns, recent pay stubs, a list of assets (including stocks and bonds, and liquid funds), as well as liabilities including debts. All of these factors will help the bank determine how much it’s willing to lend. This, in turn, will help to determine your overall budget.

Be sure to shop around with different banks to see which ones offer the best rates and terms. Also consider different loan options to see which one makes the most sense for your situation — if you plan to stay long-term, a 30-year fixed rate mortgage might make more sense than an adjustable rate mortgage that fluctuates over time. Get familiar with different options.

One more quick note — a pre-approval involves more thorough vetting by the lender than a pre-qualification. Make sure you understand the two options and how they differ. A pre-qualification is good, but a formal pre-approval is better, and shows more commitment from the bank.

Hiring a Buyer’s Agent as a First-time Buyer in Philadelphia

Many people think that hiring a buyer’s agent in Philly is an unnecessary extra step, especially when online listings have made it so easy to browse properties on your own.

A buyer’s agent can do more than just set up showings, however. Even if you enjoy doing nightly property searches from the comfort of your couch, a buyer’s agent is a great resource in making sure the homes you find are priced appropriately and meet your needs.

They’ll check neighborhood comparables to assess a home’s value, negotiate prices on your behalf, submit offers, and serve as your personal advocate.

They’ll also walk you through what to do once an offer is accepted, and help you navigate the sales contract. Having a buyer’s agent on your side can make one of the biggest transactions of your life much simpler, and less stressful. As a first-time buyer, having that support helps.

Choosing the Right Philly Neighborhood For You

Once you’ve established a budget and are ready to buy, look into different neighborhoods to see how much house you can afford in each. Aside from price, there are a number of factors that will help you decide which neighborhoods to focus on.

Think about how far from work you want to be and what your daily commute will entail, what local school districts have to offer (if you have children or plan to), amenities such as parks and recreation, grocery stores and restaurant options, etc. 

Create a detailed overview of the lifestyle you want, and hone in on which neighborhoods will best meet that vision.

For example, Rittenhouse Square has been compared to New York City’s Upper East Side with a lively park, charming boutiques, and plentiful food and beverage spots. History buffs, meanwhile, might gravitate towards Old City, which has a range of modern restaurants and bars interspersed between cultural sites such as the Liberty Bell and Independence Hall.

You’ll also notice that different neighborhoods will often have different housing styles. Some, like Midtown Village and Society Hill have charming brownstones, while others like Chestnut Hill or Roxborough have more private detached homes. Whether you’re looking for a large yard to host afternoon BBQs or are drawn to historic architecture, these are all things that will factor into which neighborhoods draw you in.

Making a Strong Offer

When making an offer on a home, it can be tempting to try to get the best deal possible. However, if you want an offer accepted, it’s best to submit close to or at asking price (as long as the final purchase price is around market value). Be sure to check neighborhood comps to make sure you’re getting a fair price based on the current market.

Your real estate agent may recommend submitting your best and highest offer, and in cases with multiple bids, that’s good advice to follow. Sellers may not want to spend too much time on back-and-forth negotiations with multiple buyers when they can instead select an offer that is close to or at their asking price.

Another way to improve your chances of acceptance is to limit your contingencies. If you’re buying the home with a mortgage, that’s a reasonable and expected contingency in the contract. However, if you request that the seller makes certain repairs before the sale, that could turn them off from the contract.

Submitting a personalized letter to the seller along with your offer may also help you stand out. For an owner that has lived in a home for years and has a strong attachment, knowing that their home will be left in good hands may sway the odds in your favor.

What Happens After Your Offer is Accepted in Philadelphia?

When you make an offer on a property, you are actually submitting a signed contract to the seller. If the seller agrees to your offer terms, they will countersign and return the fully-executed  contract. At this point, you are considered "under agreement" - also referred to as "under contract" or "in contract" by some real estate professionals. No matter what you call it, you are on your way toward the next steps involved in the purchase. 

If the seller does not agree to your terms, they will make a counter-offer. You can choose to accept that offer, counter back, or walk away. Either way, buckle up as this process can move quickly.

Once your offer is accepted, it might feel like you’re in the all-clear, but don’t get too comfortable. While an accepted offer is obviously a (big) step in the right direction, it does not guarantee that you’ll be moving in any time soon, or at all.

First, there’s the home inspection to contend with. While not mandatory, we strongly advise hiring a home inspector. The average Philadelphia home inspection costs between $300-500, but can save you thousands, if not tens of thousands of dollars, down the road. The inspector can identify damage that may not have been obvious during a showing and provide estimates for how much repairs will cost.

If the inspection turns up all clear, inform your mortgage banker that you plan to proceed, and have your agent send over the contract to review and sign. You’ll choose a closing date with the seller, and your mortgage lender will schedule an appraisal and inspection of their own to make sure the property is worth the mortgage amount.

Simultaneously, your agent will assist you with selecting a title company to help facilitate the transaction and insure the property from any defective title issues that may exist. You want a clean title on any property that you purchase and your mortgage company will want you to have a title insurance policy for protection. 

Once everything is ready to go, you’ll need to choose a Philadelphia homeowners insurance provider to cover the home — which is necessary if you’re taking out a mortgage.

Your real estate agent, title agent, and mortgage reps will all let you know if there’s anything else you need to do before you can close the deal. They’ll also be there as you sign on the dotted lines at closing! And once you’ve reached that step, consider yourself welcomed into the world of home ownership.