How Soon Can You Sell A House After Buying It?
Did you just buy your house, but are already thinking about selling it? The thing is, you can go ahead with your plans because you probably have a good reason for doing it. However, selling your home immediately or a few days after buying it may work to your disadvantage. It could mean losing money because you might end up selling it at a cheaper price, missing opportunities to add value to it, or even having to deal with mortgage prepayment penalties, among other consequences.
According to housing experts, you should consider living in your house for at least 15 years before considering selling it. This is because you probably invested a lot to get it in the first place, so it’s only right if you get something out of your biggest investment, right?
However, sometimes you might be forced by circumstances to sell it much earlier than expected. And that’s okay, that’s okay because it is part of life.
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Why Would you Sell your Home Sooner than Expected?
Being a homeowner is one of the greatest life achievements for most people. So, it’s unlikely for you to want to sell it sooner for no good reason.
But, there are numerous inevitable reasons why you would end up selling your house within the first two years of buying. They may include:
FINANCIAL CRISIS: you might find yourself dealing with extremely high mortgage rates, unreasonably high property taxes, a sudden job loss, etc.
JOB RELOCATION: you might have just landed a lucrative career opportunity, requiring you to move cities. Plus, it wouldn’t make much sense to spend too much on commute-related expenses. (For this one you might consider renting it out if your mortgage allows it.)
UNMET EXPECTATIONS: sometimes, you might buy a house, only to discover later that it really isn’t the perfect match for your needs, the upkeep is more than you expected, the kids don’t come over as much as you thought and various other reasons you may have.
INCREASED MARKET VALUE: you might have just noticed that your house just gained quick market equity and you want to take advantage of it.
HEALTH EMERGENCIES: when living expenses seem to get high, or you don’t have enough money to clear hospital bills for yourself or a loved one.
DRASTIC FAMILY CHANGES: you might have welcomed a new family member, or lost a loved one, making it difficult to continue staying at your current home. Sometimes, it could be the kids getting married and moving out, or simply joining college and the house is too big for you.
How Soon Can you Sell a House After Buying it and Make Profit?
As mentioned earlier, as a homeowner, you have the right to sell it as soon as you close the deal. However, what you should ask yourself is whether that would be a smart move or not.
Realistically speaking, selling your home less than two years after buying it means you will barely get any financial benefit as its owner.
Remember, even if you sell the house at the same price you bought it or slightly higher, it won’t make many gains for you. You will have to deduct the costs you had to undergo while buying it and the ones you’re about to undergo as you sell it. This includes the equity it has gained or lost, and the moving expenses you will have to deal with.
For a clear picture of what the costs of home selling are, use an online home sale calculator to give you a rough estimate.
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The Break-Even Horizon
To help you make an informed home selling choice, it’s best to understand the break-even horizon. It refers to the time your home will need, right from the time of buying, to begin making some gains, in consideration of all the expenses you have to endure while buying it.
Typically, it takes around 2 years and 3 months, for your home to accrue enough equity and/or even help you pay the remaining mortgage balance. So, if you sell it before this time elapses, you will realize you have incurred more expenses than you would in a renting apartment.
Remember, the break-Even horizon varies depending on your house location. Once you understand it, it will help you know how soon you can sell your home without losing your investment. Check the online rent vs. buy calculator to help you determine the breakeven horizon in your city.
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When Will it Benefit you to Sell Faster?
Occasionally, despite your area’s break-even horizon, you might sell your home earlier and still make a profit. Below are a few instances where this could be the case:
• You invested in significant home renovations to add value to your property
• The home values in your city just shot up because of new developments, such as a new company settling in your area, and you want to take advantage of this.
• You somehow managed to buy your home at a very good deal, because of one reason or the other (could be a foreclosure or short sale), and you can sell it at normal market rates and make a profit.
Can you Sell your Home 6 Months After Buying it?
As already said earlier, you can sell your house whenever you want to, but be ready to lose some money if you insist on selling it within the first 6 months of buying it. However, if you find yourself in any of the above situations, (where you can sell it and still make a profit), go for it.
Calculating how Soon You Can Sell a House After Buying It?
First, you need to understand its current market’s fair market value to help you know how much you can gain or lose. You can choose to work with a real estate agent (actually, this is the best option if you have no experience) as they can help you identify the fair market value for your home and advise you on the best selling price. Or, you can sell on your own. If you decide to do it yourself, at least hire an appraiser to help you determine your home’s market value.
Afterward, take time to subtract the closing costs from the estimated selling price to help you identify your profit. Also, don’t forget to subtract the seller prep costs as you’re likely to carry on some prep work before listing your house for sale.
Finally, subtract the mortgage payoff amount from your expected selling price. All these deductions will help you identify if you will still make some gains or not, helping you make an informed choice.