Many people purchase their homes and intend to stay there for at least a few years, but this isn’t always an option. Unexpected life events happen all the time, so it’s not unheard of to sell a house right after purchasing it.
But how soon can you sell a house after buying it?
Below, we’ll take a look at some reasons why you might be selling your home, how soon you can sell a home after buying, and some alternatives to consider.
Why Sell a Home Soon After Buying It?
First, let’s discuss why some people may be looking to sell their home soon after buying it. There are many possible reasons for doing so, ranging from personal to financial.
It’s sometimes the case that buyers purchase a home too quickly. The market may be competitive, and you may be nervous that another option won’t be available to you. You may have made too many compromises when it comes to the new home that you now regret. Maybe you’ve realized after you moved in that the house doesn’t actually suit your needs, or maybe the neighborhood isn’t as nice as you thought.
Whatever the reason, buyer’s remorse is a very common reason people want to sell their homes quickly.
The housing market can also affect your decision to sell. Your new neighborhood may be experiencing either a significant decline or a price increase. When this happens, homeowners may feel like their new home isn’t a good fit for their financial situation.
Unfortunately, we can’t control when life-changing events happen to us. A divorce, medical emergency, or the need to move for a job relocation can all occur without warning, which may result in you needing to sell your house quickly.
Of course, there is the chance that you’ve purchased your house specifically to sell it soon after. In these cases, it’s usually to turn a profit. House flippers or investors do this quite often, especially during a seller’s market.
The Pros and Cons of Selling a House Right After Buying It
If you find yourself needing to sell your house with no plans to stay in the residence for the short term, there’s only so much you can consider. However, there are a few pros and cons you should still think about before going through with your decision to sell.
First, let’s look at some advantages to selling your home immediately after buying.
- Renovations. First, you may have bought your house simply to “flip” it and turn a profit. If you’ve made all the necessary improvements to your home and are ready to sell for a profit, it can be beneficial to sell your home at its increased value.
- Market Improvement. You may also have experienced a sudden increase in demand for homes in your area. Maybe there is a new development nearby, or the job market has taken a turn for the better. Either way, if there is increased demand in the market, then you may find it beneficial to sell your home for a profit.
- Benefit from a Deal. It’s also possible that you could get a great deal on your home when you first purchased it and now can sell it for its true worth. For example, this happens if you bought your house via a short sale.
Now, let’s take a look at some downsides to selling your home so soon after purchasing.
- Capital Gains Tax. If you sell your home within two years of purchase, you will need to pay taxes on the first $250,000 that you make from the sale of your home. If you are part of a couple, that amount increases to $500,000.
- Mortgage Prepayment Penalty. Although this is rare, some lenders include a prepayment penalty clause. Lenders include these because they claim that after such a quick sale, they are missing out on the interest you would have paid if you decided not to sell your home. Usually, this amounts to 2-5% of your remaining loan balance.
- Damaged Reputation Among Future Buyers. You will also need to consider how it will appear to future buyers when they learn you’ve sold your home so quickly. Many people will wonder why you’re looking to sell so soon, even if the market is good. In these cases, they often expect that something is wrong with the property, even if that isn’t the case.
- Buyer’s and Seller’s Closing Costs. When you purchased your home, you likely paid 3-6% in closing costs. Now that you’re selling, you will also need to take into account the typical seller’s closing cost of 6-10% of the sale price. This is another added expense to consider since you will be spending them so close together.
Alternatives to Selling Soon After Buying
Depending on your situation, there are other options for you besides selling your home.
Secure a Loan
If you need to sell your home for financial reasons, there are many options available when it comes to taking out a loan to help you pay for certain expenses.
No matter which loan type you choose, you will need to pay interest and additional fees. However, compare these to the extra costs you would encounter if selling your home too early. In most cases, it’s more financially advantageous to take out a loan on your current house than to need to pay for early selling penalties, the cost of moving, and the fees associated with purchasing a new home,
Rent Out Your Property
With the popularity of sites like Airbnb only growing, you could also consider renting out your property on a short-term basis. Many of the fees above are only applicable if you sell quickly, and the cut-off is usually around two years. Consider renting out your home for these two years and then selling it to avoid those fees and gain some income while waiting.
Conclusion: How Soon Can You Sell a House After Buying It?
There you have it: everything you need to know about selling a home soon after buying it. Depending on your situation, you may have some time to weigh your options or explore alternatives.
The key is not to panic and to consider each option carefully. Never assume that moving immediately is your only option, and remember to take advantage of loans and programs that are designed to help you in these situations.
Read to learn more about your loan options? Contact the team at Associates Home Loan today.