Sometimes, life intervenes and our best planned picnics may just get spoiled by rain. That home you recently purchased and thought you’d live in for the rest of your life? Well, maybe things have become more complicated since then.
Life moves fast, and sometimes homeowners are tempted to sell fast. But can you sell your house right after buying it? Or, perhaps more importantly, should you sell right after buying it?
To help answer any questions you might have, we’re going to dive into all the major factors that you should consider when it comes to selling your house soon after buying it.
If you need assistance selling your house or are looking for a new home in Isle of Palms, SC, contact Jimmy Carrol Realty today.
Reasons You Might Sell Sooner Than Anticipated
Most people aren’t professional home flippers who buy a home with the intent purpose of selling right away for a profit. Sometimes, though, you might consider selling sooner than you thought due to one of many legitimate reasons. Some reasons to sell your home soon after buying it might include:
- A job change – Your new job is somewhere else, and you have to relocate.
- Unhappy with your purchase – While this is ideally avoided by careful vetting of a property, you might find that you’re simply unhappy with the home that you’ve purchased after living there for a short while.
- Health problems – To cover health or other emergency expenses, you might decide you need to recover some equity.
- Financial burden – You may find that the mortgage payment on your home is simply unaffordable, or perhaps there was a sharp uptick in the property taxes.
- Adding or losing family – With the addition of a baby, an adoption, or an elderly relative, or with the loss of a kid going off to college or the death of family member, you may want to relocate to a house that better suits your new family size.
- A lucrative market – If your property’s value has made huge gains in equity in a short time, you may very well be tempted to test the market and score a nice profit while the market is favorable for selling.
How Soon Can You Sell a Home After Buying?
There’s nothing stopping you from selling the next day after you’ve closed out your purchase. That doesn’t mean it makes sense financially, however.
More often than not, you’re going to lose out on the overall benefit of being a homeowner if you sell within one year. Remember that there is a lot to factor in besides just the purchase and selling prices. Take the time, effort, and money involved in moving, for example. Plus, there are costs to factor in with both buying and selling, as well as changes to the equity.
How Soon Can You Sell Without Losing Money?
The key point that you need to consider is what’s called the “breakeven horizon.” This is simply the time at which buying would be a better move financially than renting.
On average, it takes between two and three years for a home to increase in equity enough (or the balance of your mortgage to decrease enough) so it would cost you less than finding a standard apartment to rent.
Understanding the breakeven horizon will give you a solid idea of how long you should plan on holding your home before selling it without having to take a loss financially. Don’t forget, of course, that this amount of time will fluctuate based on where you’re located (or planning to move to).
When Does it Make Sense to Sell Quickly?
While it’s important to take into account the breakeven horizon, this doesn’t mean that you should never sell earlier. Consider these scenarios:
- Your plan was to flip – If you bought a house at a discount and made extensive repairs or other renovations so that you can now sell it for a healthy profit, it would make sense to sell.
- Your neighborhood and/or city gained value – There are external factors that can cause a sudden change in value for your area. For example, an attractive company hiring lots of people might have moved in.
- You got a bargain – If your home purchase was a great deal, then it’s more likely that you can sell it sooner and still make a decent profit.
Do the Math
In general, it’s good to give yourself roughly two to three years before selling, as this tends to be the usual breakeven horizon. Either way, though, you can crunch the numbers so you’re sure:
- Figure out the fair market value – Use an online site or hire someone who will appraise your home’s value.
- Consider the costs of selling – You should always factor in closing costs as they will subtract from your profits.
- Don’t forget other costs – People tend to spend thousands of dollars while preparing their home for a sale, with common expenses including landscaping, cleaning, painting, moving, storage costs, and more.
Other Factors to Consider When Selling Early
There are truly a ton of factors to keep in mind when selling a home in general, but particularly when selling a home early. Here a few more considerations to keep in mind:
- Capital gains tax – Homeowners can get a great tax break on selling a home—if they’ve lived there for at least two years and it’s your primary home. If you’re selling in less than two years, however, and for a profit, you’ll likely be subject to capital gains taxes.
- Mortgage penalties – There are lenders that will bill you for a prepayment penalty if you sell your home without waiting a certain amount of time. Make sure you’re aware if you have such a penalty on your mortgage.
- Buyers might be spooked – As people can usually see or access when you purchased the property, they may have concerns about why you’re selling so soon after buying.
As you can see, there are many factors when it comes to selling a house soon after you’ve bought it.
While there is nothing actually prohibiting you from making such a sale, you need to sit down and do your homework to ensure that you won’t end up losing a lot of money—unless, of course, you have no choice but to sell.
Choose Jimmy Carroll Realty
We hope you’ve found this blog useful. If you’re ready to sell your current property or start looking for your dream home, reach out to Jimmy Carrol Realty today. We’ll be happy to introduce you to the available properties in the Isle of Palms, SC area, which you’re certain to fall in love with. We look forward to helping you!