Selling a house soon after buying it might not sound ideal, but it’s necessary for many people. Whether you need to sell your home due to a job relocation or for any other reason, selling a new home that you just bought comes with significant risks that you should know about.
Can You Sell a House You’ve Just Bought?
Yes. No law prohibits you from selling your home after a short period or any amount of time. There is no waiting period by law. Once you’ve bought your current home, it’s yours, and you can do whatever you want with it.
People may sell a new home for several reasons. Buyer’s remorse is a common reason people end up selling their homes. You might have liked your house at first, but you now hate it. Maybe the neighbors aren’t as welcoming as you thought they were, or there is too much noise from passing traffic, preventing you from sleeping at night.
You might also want to relocate due to a new job or because a family member in another city is sick and needs your help.
Another reason to sell your home is if a natural disaster strikes and causes significant damage, and you don’t have insurance to cover it. In that case, you might not be able to afford the necessary renovations, so you may sell your home for much lower than the original purchase price.
Pros of Selling a House You’ve Just Bought
Selling a home you just bought could have several advantages, depending on your reasons and the housing market.
If home prices in your area suddenly soared after you purchased the home, increasing the value of your home significantly, you can sell your home at its new market value, make a good profit, and buy a cheaper home elsewhere.
Your property value can increase rapidly due to numerous factors. For example, suppose a new shopping mall is coming to the area, making the area more convenient to potential buyers. In that case, more people will want to move there, especially if there are currently no good grocery or shopping options in the area.
In such a hot seller’s market, selling the home might make financial sense, especially if there is a hype about the area that might die down.
House flippers buy new homes and sell them right away all the time. Typically, they renovate a property, improve its value, and sell it for a higher sale price than before. As a short-term investment strategy, house flipping makes a lot of sense and can generate a lot of money.
You just have to be smart about which properties you buy. Cash home buyers often target distressed homes because they are cheap, but the area must also be promising and not experiencing a decline.
Cons of Selling a House You’ve Just Bought
There are also several significant disadvantages of selling a home you just bought. One of the biggest ones is the short-term capital gains tax you may have to pay.
When you make a home sale and earn a profit, the IRS taxes your profit as capital gains. However, there is a notable exemption that you qualify for if you owned the home for two out of the past five years and also used it as your primary residence for two out of the past five years.
Note that this exemption applies only to the first $250,000 of your proceeds from the home sale or $500,000 if you are filing a joint return. If you sell your home too quickly, you won’t qualify for this exemption, so you will have to pay capital gains taxes as per your tax bracket.
This exemption is where the two-year rule for selling a home comes from. Most experts recommend keeping your home for a full two years before selling it to qualify.
Another disadvantage of selling a home too quickly is that it could be difficult to recover your selling costs. You may have paid a commission to your real estate agent or other selling costs when you bought the house.
When you sell your house again, you will face additional closing costs. Typically, homeowners (sellers) pay more than home buyers. However, you can negotiate with the buyer and get them to cover some costs, such as the buyer agent commission and attorney fees.
Regardless, sellers often pay an additional 5-8% in fees. It might not make any financial sense if you’re only making a 10% profit on your home.
One solution is to sell to cash home buyers in Texas. Cash buyers usually purchase your home without charging any real estate commission.
Another downside of selling your home too quickly is that you may have to pay an extra mortgage prepayment penalty. Lenders make money from charging interest on your monthly mortgage payments.
If you sell your home and pay your mortgage before a certain period, the lender may charge you a penalty to recuperate the lost interest revenue, depending on your mortgage contract.
Also, if you sell your house too quickly, you could lose out on the opportunity to build equity.
Selling a House You’ve Just Bought
Selling a house you just bought makes sense in several situations. The first is if you have some sort of emergency that forces you to sell earlier than you expected, such as:
- Your job is relocating you to a new city
- You found a new job in a new city
- A family member is sick, and you need to stay with them
- You or a family member needs money to pay their medical bills
While all of those are personal situations that may require you to sell a home, there can also be financially-based reasons that have nothing to do with your personal life. Here are some additional instances in which selling a new home makes a lot of sense:
- You came across a profitable investment opportunity you need money for
- You renovated the house and are in a position to sell it for a lot more than what you bought it for
- Home prices suddenly boomed, whether due to overall housing market conditions or conditions specific to your area
- You found a buyer who loves the house and is willing to pay a lot of money for it
However, the profit you earn should be much higher than any closing costs.
It might also be wise to sell your home quickly if home prices in the area will likely go down. Something might have happened since you bought the house, such as the announcement of a factory that developers will build in the area, which can pollute the surrounding air and ruin the view from your upper floor or balcony.
Reports of increasing crime in the area can also drive down property prices, so consider selling your home quickly before things worsen.
Selling your house as is might also be necessary if it suffered extensive damage that you can no longer repair. Cash buyers typically buy homes as is, renovate them, restore the house, and then flip them for a profit.
Finally, another situation in which you might need to sell a home is if you can no longer afford to pay your mortgage. Let’s say you lost your job, for example, or lost a lot of money in a bad investment.
In that case, you might be able to sell your home to a cash buyer who can pay off your mortgage. If you have negative equity, which is when your home is worth less than what you owe on your mortgage, you could also make a short sale.
How To Sell a House You’ve Just Bought
When selling a home you just bought, it’s critical to do all you can to avoid incurring extra costs. Negotiating with the buyer is a must. Try to get them to cover as many closing costs as possible, so you can retain more of your profit from the sale.
One of the best ways to decrease costs is to sell to a cash buyer. Doing an FSBO (sell a house by owner) sale and avoiding a real estate agent can help you avoid many fees. However, by selling to a cash buyer, you will also evade buyer agent fees, which you may still have to pay if you make an FSBO sale to a regular home buyer.
Selling to a cash buyer is also the best option if you need to sell your house fast due to an emergency or because you need to move. You can get your cash in as little as a few weeks or even less, allowing you to reinvest the money or pay off your medical bills.
We buy houses San Antonio. Whether you need some quick cash, can’t afford to repair your home, or just need to get a home you recently purchased or inherited off your hands, contact us.
We will inspect your home (in person or virtually) and give you a fair cash offer. We will then close on your schedule.