How Soon After Purchasing a House, Can I Sell It Without Getting Burned?
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One of the many perks of being a homeowner is that you can do what you want with your own house. Feel like hanging some quirky wallpaper? Paper away!
Maybe you want to go all-in on the latest color trend, bright neon orange. Why not! Want to sell your home right after you bought it? No one can stop you!
While it’s definitely your choice when to sell your home, selling soon after purchase may mean losing money. Research from the National Association of Home Buyers shows that, on average, people stay in their homes for 13 years.
However, about 5.5 percent of homeowners move within the first year, and another 5.8 percent move in the second year of ownership.
If you’re considering joining the 11.3 percent of homeowners that sell quickly, you can take steps to make the most profit. Read on to learn how soon you can sell your house after purchase without getting burned.
Why You May Need to Sell Your House Soon After Purchase
Most people don’t enter into a home purchase with the intent of selling quickly. But sometimes life throws a wrench into the most carefully laid plans.
Common reasons to sell a home soon after purchase include:
- Losing a job
- Moving for a new job
- Family emergencies, such as a divorce or death
- A change in health status
- Your property value increased suddenly
- Buyer’s remorse; you just don’t like the house, the neighborhood, or the location
Whatever the motivation behind the need to sell, be sure to explore ways to avoid losing too much money.
Breaking Even
Assuming a 20 percent down payment and a 30-year fixed-rate mortgage, you won’t break even on a home purchase until you’ve owned the property for at least five to seven years. This takes into account the costs associated with purchasing, owning, maintaining, and selling your home.
If you’ve taken out a second mortgage or your home’s market value has declined, you may end up owing more than your home is worth. This is known as “being underwater” on a mortgage.
Either way, if you need to sell before five to seven years, chances are high that you’ll take a loss.
Consequences of Selling your House Soon After Purchase
Why, exactly, does selling a home soon after purchase mean losing money? For one thing, you’ll eat all the costs associated with buying the home in the first place, such as closing costs and real estate agent commissions.
Then there are the capital gains taxes… which you’ll be liable for if you sell the house within two years of purchase. Many lenders also charge penalty fees when mortgage loans are paid back too quickly.
Finally, if you put your house back on the market soon after purchase, potential buyers will wonder why. Many will assume there’s something wrong with the property, making your home less desirable and more likely to linger unsold on the market.
Best Way to Sell a House Soon After Purchase
There are many reasons why you may need to sell your home within a few years of purchase. But whatever the reason, you probably would prefer to sell and move on quickly, especially if you just went through the process of selling a home and moving.
Why not make it easy on yourself? Sell your home fast — for cash — with HomeGo. Not only will you save on commissions, fees, marketing, listing, and staging expenses, you’ll be able to move on quickly from your unwanted property.