You recently purchased a home, and now you want to sell it. You’re now contemplating if selling your property is a good idea. Is there a certain amount of time that must pass before putting your home on the market? Are there negative financial consequences associated with listing so soon? Should you worry about prepayment penalties from your lender or capital gains tax?
In this guide, we’ll address these questions and help you understand the potential outcomes of selling your property shortly after buying it.
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Reasons For Selling Your House Soon After Buying It
When you purchased your home, chances are you didn’t plan on selling so soon. However, there are situations where it could be a good idea and where it could be warranted.
Changes In Personal Circumstances
Did you get a job offer that’s too good to turn down? Or maybe there have been significant changes in your financial situation or personal life, like the death of a relative, a health emergency, a teenager leaving for college or financial hardship? In that case, selling your home soon after buying it could be practical.
Buyer’s Remorse
The home seemed like the perfect fit at the open house and during the walk-through. But now, you’ve moved in and discovered that it’s not quite what you envisioned. Or you may have underestimated the mortgage payment or the cost of maintaining your property.
Attractive Offer
If the housing market is thriving in your area and there are far more buyers than inventory (home prices are up), chances are you’ve received a lucrative offer on your home. And you worry that you may not have the opportunity to turn such a large profit in the future if the market cools down.
Changes In Neighborhood
The neighborhood presented itself as an incredible place to live before you moved in. But you now realize that it’s not up to par and fear that it will only go downhill even more soon and would like to sell before it’s too late.
Costs Of Selling Your House Soon
You’re allowed to sell your home as soon as the transaction closes. However, you should consider the costs of selling your house to determine if you’ll break even, turn a profit, or lose money on the sale.
House Prep Costs
Before putting your home on the market, you’ll likely need to spruce things up to attract lucrative offers. If you’ve only lived in the house for a short period, a deep clean that costs a few hundred dollars could be reasonable.
But you could spend a few thousand if your home’s exterior and interior need significant upgrades, like carpet cleaning, painting and landscaping. In addition, you’ll want to add to your house prep budget if you plan to hire a professional home staging company to make your home more appealing to potential buyers.
Listing Costs
Real estate commissions are between 5 and 6 percent of the sales price. This amount is typically split between the buyer’s agent and the seller’s agent.
Submit an online application form to inquire about Angel Oak Mortgage Solutions financing options.
Buy a home or refinance your existing mortgage with Zero Mortgage.
Older homeowners can get peace of mind and added financial security with a reverse mortgage from AAG.
Closing Costs
On average, you’ll pay 8 to 10 percent of the sale price in closing costs (including real estate agent commissions). So, if your home sells for $325,000, expect to fork over between $26,000 and $32,500. You can find the exact amount on the closing disclosure provided by the title company.
Moving Costs
Don’t forget to include moving costs in your calculation. They vary by the items you have and the distance of the move, but you can cut costs by handling the move on your own instead of hiring professionals.
Capital Gains Tax
Homeowners who live in their homes for at least two years can exempt up to $250,000 of their profits from capital gains tax. This amount increases to $500,000 for couples.
Mortgage Prepayment Penalty
Most mortgages span 15 or 30 years, and lenders collect interest from you during the entire loan term. Consequently, some mortgage lenders assess prepayment penalties to borrowers who pay their loans off early.
The Five-Year Rule
Industry experts recommend that you live in your home for at least five years. Staying put allows you ample time to build up equity in your home and earn a profit when you decide to sell.
House Selling FAQs
Yes, you’re allowed to sell your home after closing.
Yes, you can sell your home six months after buying it. However, the likelihood of losing money on the sale is relatively high.
No, but it’s the minimal amount of time experts recommend that you remain in your home to break even when you sell.
No, you’re not required to wait five years before selling your home.
Not necessarily. It depends on the current market conditions and what you paid for the home. For example, if you purchased the property as a short sale or foreclosure for a fraction of what it’s worth, it’s possible to earn a sizable sum by selling it after a year. The same applies if you bought a fixer-upper and make significant upgrades, or the housing market is thriving in your area, and there are more buyers than sellers.
