Home buyer beware…
Torey is Founder & Leader of URBN HMES: A client focused real estate experience that blends conventional principles with modern lifestyle to ensure comfort and optimal performance in a constantly changing marketplace.
There are three phases of homeownership: Buying, Enjoying, & Selling. The majority of our time as homeowners is spent in the “Enjoying” phase, as buying and selling are each brief and transactional in nature.
Sometimes, the enjoyment of your new home is utter bliss, other times it is an utter nightmare. The most unfortunate thing about this nightmare is the emotional pain that comes along with such issues. Beings your home is meant for fostering positive memories, what is the most concerning issue that buyers face in the city of Philadelphia preventing you from creating those memories?
Poor Craftsmanship / Poor Construction top’s the charts!
This issue can rear it’s head in many forms, from roof’s, to stucco, to improper laying of floors, plumbing mistakes, etc, the list can go on and on. The one thing theses mistake share is they each cost you time and energy.
Lets now attack this issue in a 2 part series. Part 1 (Below) answers the question of “Why is construction quality poor across the city?” Part 2 (next week) will cover “How can you shield yourself from poor construction headaches.”
What is the largest factor leading to poor construction quality in Philadelphia?
It’s simple: Generally speaking, you, the consumer, are not willing to pay for higher quality construction. Let me explain:
Real estate construction, in any form, is widely business rooted. This means profit drives opportunity which spurs action which leads to an end product. Simply put, profit matters, and without profit there is no reason for any investor to take any risk and build a new structure. How do builders achieve profit?
Builders achieve profit by a mixture of revenue (Net Sales Price) and a reduction of expense. These expenses include the cost of the acquisition, the sale, soft costs, and hard construction costs.
In the city of Philadelphia average home values are in the $300,000 range with land costs at $75,000. This $225,000 does not leave much room for profit to the investors at the end of the day after all of their costs are paid. As a result of this, the highest costs tend to get trimmed down in order to afford the investor the possibility of protecting their profit. The higher-cost expenses tend to lie in the hard construction cost arena.
This battle to reduce comparatively high construction costs across the city eventually ends up with investors hiring less talented / more cost effective construction companies, or putting large amounts of pressure on reputable construction companies in order to construct the project at cheaper levels which ultimately leads to short cuts.
Now I know what you are thinking: “Well a well constructed house will yield a higher sales price than a poorly constructed house, Right?”. Answer is, “Not in Philly.” Scouring the market, there is not any substantial difference in a home built with care and a similar looking new construction home missing a few nails. This happens partly because the consumer is not willing to recognize smaller details and financially appreciate then, partly due to a lack of due diligence by the market, and partly due to a heavy reliance on lending as a result of less liquidity in an environment defined by nominal wage growth. Still, only time proves a great buy from a real headache.
When the dust settles in business and with home sales, it is always the consumer that is left holding the bag; Now tune into next week to find out how to save yourself from the emotional heartache of buying a poorly constructed home.