If you just bought a house, what happens if you need to sell it quickly? Can you sell a house within six months of buying it? When it comes to reselling your home within six months of your initial purchase, the answer is a qualified “yes.” Here are a few basic things to consider if you’re putting up a recently purchased home for sale.
How Soon After Buying a House Can You Sell It?
As a homeowner wondering, “can you sell a house within six months of buying it,” the answer is “always.” You own the property, and you always have the legal ability to sell the property at any time after closing. But any time that you resell a property within the first six months of initial ownership, you may lose money on the deal. We’ll be discussing the “breakeven horizon” in more detail a little bit later, but the horizon is the point at which you can sell the home without leaving money on the table. Several regional and geographical factors go into calculating the breakeven horizon. Calculating the horizon also depends on the loan terms and how much of a down payment you made at closing.
Why Do Homeowners Sell Sooner Than They Expected?
If you ask property investors if you sell a house within six months of buying it, they’ll probably tell you they can only make it profitable because they have the time and resources to make it work on a home purchased at a deep discount. Most homeowners making quick resales are doing so out of necessity.
Today’s professionals often have to make cross-country moves at the drop of a hat as families relocate to follow the primary breadwinner’s career. Sometimes market conditions or personal circumstances will require you to come up with some cash, and your home equity may be one of your biggest assets. It’s never an ideal situation to sell your home early, but sometimes you’re simply left with no other choice.
The Breakeven Horizon
If you’ve ever wondered how soon you can sell a house after buying it without losing money, the quick answer is usually at least a year. To break even, you have to be able to recoup your closing costs. The market conditions heavily influence the breakeven horizon in your local community, and it’s the most convenient indicator of how soon you can resell a home without losing money. Can you sell a house within six months of buying it? Yes, but it will probably not be enough time to pass the breakeven horizon.
How Capital Gains Tax Works
The tax penalty for selling a house before two years is very significant. If it’s your primary residence and you have occupied the home for two years or more, you will be exempt from the capital gains taxes assessed on the proceeds of the sale. There is an exemption limit of $250,000 for an individual buyer or $500,000 as a couple. Your capital gains tax responsibilities depend on how long you lived in the home and your income tax bracket if you’re reselling the property with less than two years of occupancy.
Can you sell a house within six months of buying it without paying capital gains taxes? In some cases, you might be able to avoid capital gains taxes, such as a natural disaster or the loss of a job. Be sure to consult with your tax professional for advice on limiting your exposure to capital gains, tax liabilities, and other fees.
Challenges and Disadvantages of Selling Early
Can you sell a house within six months of buying it without a prepayment penalty? Yes, if you have an FHA loan. The prepayment penalty is a way for lenders to recoup some of the interest revenue they will be losing if you sell your home quickly after buying. In fact, most of today’s home loans allow you to pay them off at any time without a prepayment penalty. Still, they’re much less common today with so much competition in the home lending market.
You should also anticipate negative buyer perception and make it clear exactly why you’re selling in the listing. “Seller must relocate” is usually sufficient to ease prospective buyers’ minds. There are many reasons why a property only gets a scarcity of offers, but if you’re not generating sufficient interest with the listing, it’s often because the property is overpriced. You should also beware of property flippers who resort to email or text spam and cold calling. If they’re legitimately qualified buyers at all, they’re usually only interested in making a lowball cash offer on your property far below the home’s actual market value.
When Does It Benefit You to Sell Fast?
Even though it’s generally a good idea to stay put for as long as you can, there are some circumstances where it might be worth cashing out the equity in your home before you reach your breakeven horizon. If you bought a foreclosure property as an investment in a hot market, the profits on the sale could more than recoup closing costs. The median price of single-family homes climbed in every market tracked by the National Association of Realtors (NAR), with the most significant gains in the west.[1] With property values skyrocketing, selling your home is a perfect way to raise needed cash.
Be sure you know what you’re doing any time you consider buying or selling a home for financial reasons alone. It’s not a good idea to borrow against your home equity to raise cash, but it might be a much easier way to get some money in your pocket while retaining the deed to your home and your accumulated equity.
How Can You Determine Your Listing Price?
Selling your home on your own is very hard work, and the additional expense of paying a Realtor’s commission is more than justified in terms of the home’s final sale price. A local Realtor will be able to help you get a quality appraisal using current neighborhood comps and market analysis. A Realtor will help you set a good listing price and will work around the clock to make sure plenty of well-qualified buyers view your home.
If you have any questions about buying or selling a home, feel free to contact us at any time. Peggy Young and her team understand the needs of home buyers and sellers in Scottsdale because we believe in listening to our clients. We hope you found this information about reselling a new home or investment property helpful, and we always encourage you to contact Peggy any time you have questions about what to do if you just bought a house. We’re always also happy to discuss a free, no-obligation consultation any time you’re in the market to buy or sell property or land.
