Some situations make it necessary to sell your home urgently. But how soon can you sell a house after buying it?
As seasoned cash home buyers in Tennessee, our team at My Tennessee Home Solutions can help you determine the ideal time to sell your home and discuss the consequences of selling a house early.
Calculating Whether You’ll Make a Profit
Before you decide to sell your house, you need to know if you’ll come out in the red or in the black. First things first, find out your home’s fair market value. Research prices of similar homes in your area and hire an expert to value your home or conduct a comparative market analysis.
Next, subtract your outstanding mortgage balance, estimated selling costs, and any taxes you’ll owe. The figure you get will show whether the sale will lead to a profit or loss. Knowing your position will help you plan for the financial impact.
How Soon Can You Sell a House After Buying It?
Houses typically increase in value annually, so holding onto your home for longer raises the chances of maximizing your profits. However, no hard-and-fast rule exists for how soon you can sell a house after buying it.
When deciding how soon you should sell your home after buying it, consider the breakeven point.
The breakeven point refers to when you can sell your home and recoup the money you spent to buy it. While mortgage rates fluctuate and housing markets vary by location, most property owners break even when they sell their property after living in it for at least two years.
As such, experts recommend staying in a house for at least two years and ideally five years before selling it.
If you decide to sell your house after living in it for at least two years, you can deduct up to $250,000 ($500,000 if filing jointly as a married couple) of the profits of the sale from your taxes.
Why the Breakeven Point Matters When Selling a Home
Selling a house costs money. Given the right conditions, you’ll at least break even. However, if your home hasn’t appreciated enough, closing costs can wipe out any profits you stand to make from selling early.
In such a case, consider delaying the sale. Waiting five years to sell allows the property to gain value and can help you avoid capital gains taxes.
Consequences of Selling a House Shortly After Buying It
While sometimes you have no alternative but to sell, understanding the repercussions of selling too early can help you make an informed decision.
If you sell your house within two years of buying it and stand to make a profit from the sale, you’ll owe capital gains tax on the sale.
Buying and Selling Expenses
If you recently bought a house, you probably depleted your savings on the down payment and spent about 2 to 5% of the purchase price on closing costs. Selling early will force you to do the same.
In fact, sellers incur a larger share of closing costs.
Mortgage Payment Penalties
Although rare, some lenders charge a penalty fee if you sell your home shortly after buying it. Check with your mortgage lender to avoid such costs coming as a surprise.
Negative Buyer Perception
Since potential home buyers can access data on previous sales dates, selling too soon may raise a few eyebrows. You might get a few offers or lowball offers from buyers who assume your property has an issue.
When Selling Fast Makes Sense
Sometimes, you may still turn a profit even if you sell your home soon after buying it. Common scenarios in which you stand to benefit from selling your home within two years of buying it include:
- You got a good deal when buying, say, as a short sale or foreclosure, and can sell the house at the current market price.
- Your home or neighborhood increased in value unexpectedly.
- You’ve made significant renovations in a short period, increasing your resale value.
Sell Your House Fast in Tennessee
If you need to sell your house fast, reach out to My Tennessee Home Solutions, the only 5-star company in Tennessee to buy your home as-is. We’re a veteran-owned and -operated company, which means we put honesty and transparency at the forefront of everything we do.
If you recently bought a home and have little equity (or no equity), ask about how our Equity Protection Program could help you. At My Tennessee Home Solution, we can buy your home “subject to” the existing loan.
So, what does that mean, and how can it help you sell quickly? Essentially, we take over the loan payments for you so you can sell the property and walk away. If you need to sell a house soon after buying it, this can be an excellent option.
As a local and experienced real estate team, we can answer questions like, “How soon can you sell a house after buying it?” and explain how foreclosure affects a home sale.
Call (615) 933-5431 to get a fair cash offer for your home with no fees and no commissions.