Buying a home is an excellent investment. Whether buying it for yourself or your family, as an investment property or to flip the home and resell, it’s an exciting time. Many people are in positions where they need to sell their house fast after buying. This can be because of a natural disaster, divorce, job relocation, or another reason.
For whatever reason, if you recently purchased a house but are interested in selling it, how soon can you sell your house after you buy it?
The answer isn’t black and white regarding a quick sale. If you’re wondering, “Should you sell your house now” or if you should wait, here’s everything you need to know about the soonest you can sell your new house after you buy it.
How Soon Can You Sell a House After Buying It
The short answer is that you can sell a house you just bought as soon as you want to after the purchase goes through. While you have the ability and the right to do this, is it the best time to sell a house? No.
If you can, the amount of time you should wait to sell the house is two years. By doing this, you can avoid paying capital gains taxes. If you can make it to five years, you’ll have a much higher chance of earning a profit from selling your home. The five-year rule is just a guideline and not legally binding.
Unfortunately, this isn’t possible for everyone because of a financial bind, a divorce, or other situations. If you cannot wait at least two years to sell the house, you can sell it once the sale goes through. A house flipper tends to sell a home quickly after buying because it’s not their primary residence so these sales can happen.
Why You Should Wait To Sell a House
One of the main reasons you should wait at least two years to sell a house is to avoid paying capital gains taxes. These can be hefty when you try to sell your house too soon after the initial sale. Just because you will have to pay these doesn’t mean you can’t sell your home right after purchasing.
Depending on the state of the house when you buy it, waiting to resell the home can allow you to take the time to work on home improvement projects, repair damages, and let the house gain value. Renovations can help increase your chances of the home selling fast.
If money isn’t the goal of selling your house, then this might not matter to you. In reality, no rule or law states how long you must live or own the property before selling it. Another reason you should wait as long as you can sell your house is that selling costs can be high.
In a perfect world, if you sell your house quickly after you purchase it, you might break even. In most cases, you will lose out on money. But, if significant improvements are made to the house quickly after you purchase it, you might still profit from selling it fast.
Looking into market conditions before choosing to sell can help. If it’s a seller’s market, you have a higher chance of earning a profit. Real estate agents can help with market analysis and help you through the quick sale process. You might have to lower your sale price if you’re desperate to get out of homeownership.
Understanding Home Equity
To help you better understand how soon you can sell a house after buying it and to make the best decision for you, you need to understand home equity. Home equity is the value of your (the homeowner’s) financial interest in the home.
It’s the property’s current market value minus how much you owe on the home. Your home equity will fluctuate over time based on current market conditions, surrounding home values, and how many payments and the number of payments you’re making toward the mortgage. The value of your home will likely go up the more work you do on it and overtime.
Home equity is more than just a mortgage loan. It’s an asset you can borrow to meet financial needs like paying off high debts. When borrowing home equity, you will have an interest rate, but it tends to be lower than the interest rate on credit cards and other loans.
When selling a house, if you have enough equity in the home, you can keep the difference after selling and dealing with closing costs. If you choose to sell your home quickly after initially purchasing it, you probably don’t have a lot of equity, which can cause you not to make a profit and even lose money when selling the house.
Can You Sell a House With Negative Equity
You could have negative equity with a house if you didn’t know. Negative equity means that the house’s current market price is lower than whatever the outstanding balance on the house’s mortgage is. In short, it’s when you owe more on the mortgage than the market value of the house.
Many times when people go to sell their home quickly after purchasing it, they have negative equity because they’ve barely made or haven’t made any payments towards the mortgage loan balance. Having negative home equity can make selling a house much more challenging than having a little home equity.
Tips For Selling a Home With Negative Equity
If you’re in a position where you need to sell your home fast but have negative home equity, here are some tips to help you sell the house.
1: Bring Cash to the Closing
For homeowners with a hefty amount of cash, bringing it to the closing of your house with negative equity can help push the sale through. You can use the cash to pay off the remaining mortgage balance and cover the closing costs.
This will push the sale through quickly and let you sell your house quickly after buying it. If you’ve never brought cash to a closing before, don’t worry. Cash home buyers in Texas are common.
2: Negotiate With the Lender
If you don’t have enough cash to bring to the closing, you should try and negotiate with the lender.
With some persuasion, you can work with the lender and get them to accept less than the total amount of money you owe on your mortgage payments. This is commonly known as a short sale but requires the lender’s approval.
3: Ask a Real Estate Agent for Help
Lastly, ask a realtor who specializes in helping homeowners with negative equity. They can offer advice and guidance to help you find a solution to sell the home quickly after purchasing it.
If you need to get a new home quickly, consulting a professional who can walk you through a fast home sale and how to plan for a down payment when you might not earn a profit from your sale is ideal.
Can You Sell a House Soon After Buying It
Yes, you can sell a house soon after buying it, but that doesn’t mean that you will earn a profit, that you should sell it, or that you won’t face the consequences.
Consequences of Selling a House Soon After Buying It
Financial loss is the main consequence of selling a house too soon after purchase. The transaction costs of buying and selling a home can add up fast. In a perfect world, you might break even, but it’s not likely, depending on how quickly you choose to sell your home after buying it.
You will also likely have a mortgage prepayment penalty. If you have a mortgage on your home, you’ll likely have to deal with prepayment penalties. Most of these penalties are assessed based on the outstanding balance of your loan. They take a percentage from that.
It is essential to understand that there might be legal issues if you try to sell your home soon after buying it. Whether there are legal issues and what those depend on the terms of your sale contract and any local laws where the home is located.
There’s the emotional impact of selling a home too soon after buying it. Selling a home can be stressful, but that emotional impact can be greater when you try to sell it too soon.
Especially when you’re trying to sell your house fast because of a health emergency, divorce, or death in the family, adding this extra emotional turmoil can be more costly than it needs to be. There’s the chance of losing money, paying higher fees, and ending up disappointed.
Conclusion
The soonest you can sell a house after buying it depends on your contract and preference. There are no rules about how long you need to wait to sell a house after purchasing it, but if you choose to sell your home too quickly, you can face the consequences like losing money, being in breach of contract, and paying capital gains taxes to the IRS.
If you’re in a position where you need to sell a house fast in Marion because of a health emergency, divorce, buyer’s remorse, or other reason, we buy houses San Antonio is here to help! Contact us today to learn how we can help you sell your home fast, regardless of how recently you purchased it.