It is possible to sell your home within a day of buying it. However, selling your home too soon after purchasing it can lead to losing money, missed opportunities, capital gains taxes, or penalties for mortgage prepayment.

Why Homeowners Are Selling Earlier Than They Expected

Unless you are a professional home-flipper, chances are you didn't plan on selling your property soon after purchasing it. However, there are many reasons why people sell their homes within one year of buying them.

• Job Relocation:

  You might need to relocate to pursue a career or reduce your commute.

• A Medical Emergency

• Buyer's Regret:

  It's possible that the house you purchased isn't right for you.

• Family Changes: 

  A new family member, a child, leaving to college, or a death can all lead to people selling and finding a better place for their needs.

• Financial Toll:

  Your mortgage payment may be too high, or your property taxes have increased too much.

• A Hot Seller's Market:

  You might have quickly gained equity and want to make a profit as soon as possible.

What Is The Best Time To Sell Your House Once You Have Bought It?

The technical truth is that you can sell your property at any time after the closing day. Is it a smart financial decision?

Selling your home in under a year can eliminate the financial benefits of homeownership. Selling the house is not about getting the price you paid. It is important to consider the cost of buying, the selling costs, equity gains or losses, as well as moving costs.

Breakeven Horizon

The breakeven horizon refers to the time it would take to buy and make more financial sense than renting. This includes all expenses associated with buying a home.

It might seem that renting is the best option if you are only staying in one place for a while. However, two years and three months is the minimum time it takes to buy the median-valued home in the country. This will allow you to accumulate enough equity or pay down your mortgage balance to make renting an apartment more affordable.

Breakeven assumes a 20% downpayment and monthly payments on a 30-year fixed-rate mortgage at the current interest rates for people with credit scores between 680 and 740. To calculate earned equity, the tool considers current and anticipated market appreciation rates. In addition, the tool calculates taxes, insurance, and closing costs for condos. It also includes 8% selling costs in order to realize the sale profit.

This breakeven horizon can be used to determine when you can sell your home once you have purchased it. However, this horizon will vary depending on where you live.

Selling Fast Is A Benefit

It is possible to make a profit even when you sell before the breakeven point of your local area. These are some common examples:

• The house was flipped, and you made significant renovations within a short time frame to increase its resale price.

• Due to the new development or large companies moving into your neighborhood, unexpectedly increased home values in your community.

• It was a great deal at the beginning. You might make a profit if your home was originally purchased as a foreclosure sale or short sale.

Find Out How Quickly You Can Sell Your House After Purchasing It

Although you can always sell, it is best to wait at least two years before selling. This allows you to gain equity and hopefully offset closing costs. You can also exclude from your taxes up to $250,000 (or $500,000 for married couples) if you live in your home for a minimum of two years.

There are situations when you can't wait for two years to sell. Do the math first if you find yourself in this situation so that you can predict any loss. It can reduce stress and make it easier to make informed decisions.

Find The Fair Market Value

To begin, determine how much your home can be sold for. This will help you to know what you are likely to lose or gain. An appraiser can help you determine the value of your property if you are selling your home on your own. A real estate agent can help you determine the fair market value and recommend a listing price. They will also use market analysis and neighborhood comps to assist you in determining your home's market value.

Add Closing Costs To The Projected Sale Price

Closing costs can take a lot out of your profits, especially if you are buying and selling in a short time. Therefore, closing costs should be included in the equation.

Closing Costs For Buyers:

The buyer closing costs typically amount to between 2% and 5% of your home's purchase price. Look at your settlement statement to see the amount that you paid for your home. It's not uncommon for buyers to request that sellers cover closing costs in negotiations. So it is possible that you paid very little when you bought your home.

Seller Closing Costs:

Sellers may have closing costs of 8% to 10% of their sale price. Commissions account for the majority of these costs. The seller usually pays their agent's fee and a small portion of the buyer agent's fee. These costs add up to between 5% and 6% of the total sale price. For a $200,000 house, closing costs could range from $16,000 to $20,000.

These are the most popular charges:

• Commissions for agents

• Title insurance

• Escrow fees

• Transfer and/or Excise Tax

• Property taxes prorated

• HOA fees prorated

• Attorney's fees

Add The Seller Prep Costs To The Projected Sale Price

Even if the house has been your home for a while, it is still possible to need to prepare it for sale. These tasks include painting, staging, cleaning the house, carpet, lawn care, and local moving costs.

Add The Amount Of Mortgage Payoff To The Projected Sale Price

Your payoff amount will not be lower than what you borrowed if you have owned your house for less than one year. Most of your monthly payments go to interest at the beginning of a loan. You won't have made enough to reduce your principal loan amount.

If you haven't been making substantial additional principal payments each month, it is unlikely that your mortgage payments will be enough to cover the selling cost and allow you to break even. To make a profit, you will need to consider how much your property has appreciated in value over the time you have owned it.

Selling A House Early Can Have Other Consequences

Consider the additional costs of closing and preparing for the sale, as well as the potential financial consequences.

• Capital Gains Taxes

  Capital gains taxes are not payable if you have lived in your home for more than two years and it is your primary residence. You can sell your property for up to $250,000 or $500,000 for a couple.

  However, if your primary residence is being sold before you have lived there at least two years or more in the past five years, you could be subject to capital gain taxes. Capital gains taxes are only applicable if you make a profit.

  The length of your home's ownership and your income tax bracket will affect the capital gains tax rate. You should note that capital gains taxes are not applicable to those who have lived in their house for less than two years. However, there are certain cases in which you might be exempted from capital gains taxes, such as if a natural disaster destroys your home or you lose your job. If you have questions about capital gains tax, consult your tax professional.

• Mortgage Prepayment Penalty

  Some lenders may charge a prepayment penalty if you sell your house within a specified time after purchasing. This is a way for lenders to get some interest payments back since they are not getting them. The terms of your loan will determine the amount you have to pay. This could be a percentage (typically between 2% and 5%), a percentage owed interest, or a flat rate.

  Prepayment penalties are not a common feature of loans today. For example, FHA loans don't have any prepayment penalties.

• Negative Perceptions Of Buyers

  Buyers and agents can view your listing history online as well as on the local MLS system. This allows them to see when and how much you paid. Buyers might be concerned if the property isn't being sold within a year of buying it.

  If you don't clarify why you are selling (e.g., "the seller must move"), this negative perception can lead to lower or fewer offers.

Is It Possible To Sell Your House In 6 Months After Buying It?

You can sell your house at any time you like, but it's likely that you will lose money if the sale is made within six months.

How To Calculate Your Net Proceeds For Six Months Of Homeownership:

• In October 2018, a $200,000 purchase was made on a home.

• The home was owned for six months.

• The 20% down payment was $40,000 for the home.

• Closing costs were 3% of the purchase price ($6,000).

• For a monthly payment of $811, $160,000 was financed at a 4.5% rate on a 30-year fixed loan.

• In the first six months after paying the mortgage principal, equity of $1,276 was gained.

• Closing costs for a home sold were approximately $20,000.

• Total loss: $26,000, including closing costs and equity gains of $1,276. This makes a total loss of $24,724.

To break even, you would need to sell your home for at least $224 724. In addition, you wouldn't be able to recoup the interest payments of $3,588 over three months, $1,482 in six months, or insurance costs of $442 in six months. These expenses were not included in the above calculation because they would have been incurred if your home had been rented or owned elsewhere than it was when you bought it.