How Fast Can You Sell a House After Buying It?

The typical seller lives in their home for 15 years before putting it up for sale, according to the Zillow Group Consumer Housing Trends Report. A home is most people’s largest financial investment, so homeowners tend to stay long enough to gain significant equity. But life can change unexpectedly, and you may need to move sooner than you had expected. (1)

Please note that when you sell your home sooner than expected, there are financial implications such as price stagnation and paying capital gain taxes, meaning there is a high possibility of making a loss or not making a huge profit. As a result, there is a ‘five-year rule’ that recommends selling homes after five years so as to prevent homeowners from losing money. Keep reading to learn more.

What is the “Five-Year Rule”?

Typically, you won’t reach a break-even point if you don’t live in your house for five years or above. This means that when you sell your house after staying in it for less than five years, its market price won’t cover the money you’ve spent on purchasing it, transaction costs, and making the necessary improvements. Yes, you can say the house value will appreciate, but it won’t appreciate that quickly to outgrow the money you have put into acquiring and making it habitable.

But after five years, the house value might have gone up, and when you sell it at that point, you will likely make a profit. But some situations may force you to sell my house fast Tampa earlier than you had envisioned. So you are allowed to break this rule, but your main focus should not be on making a profit.

Why Homeowners Sell Their Homes Sooner Than Expected

As an ordinary homeowner, you may be forced to sell your house sooner. Here are situations that can make you do it:
Job Transfer or Relocation – If you have been working in one city, but your company transfers you to a distant location, you will sell the home and move to the new location. If you are an entrepreneur and find new opportunities in a new location, you will also be forced to sell your home and move with your family to the new area.

Changes in the Family – When you feel that your current home is not large enough for your family, you may be forced to sell it to buy a larger one. Also, if death happens within the family, you may be forced to consider selling your current home and moving to a new one.

Medical Emergencies – If a loved one has a medical emergency and has a huge medical bill and other unexpected expenses, you may be forced to sell the home to cover their expenses. Alternatively, you may need to sell my house fast Tampa to move closer to the affected loved one.

Financial Changes – If you lose your job, you may be forced to sell your current home and move to a smaller one because you won’t be able to cover the expenses. On the other hand, when you become wealthy or win the lottery, you may decide to sell your current home and move to a better neighborhood.

House Market Conditions – If your home’s value increases more quickly due to favorable market conditions, you can sell it sooner to make a profit.

How Soon Can You Sell Your House Without Losing Money 

You can sell your house sooner than expected due to any of the above reasons. But in every situation, there are financial risks. So you should carefully think through the decision to avoid losing money. The Breakeven point is one of the things you need to learn about to know when you should sell your home and make a profit.

What is a Break-Even Point, and How to Calculate it?

The Breakeven point is when you can expect to sell your house and recover all the money you have spent on buying and improving it. Please note that your house price will rise over time, and you’ll also gain equity by paying your mortgage. Considering break-even point and mortgage rates vary and fluctuate, it is wise to calculate breakeven if you must sell my house fast in Tampa.

Calculating break-even of your home is not easy. But let’s try to simplify it. First, you calculate the amount you have already spent on the home, such as the down payment, closing costs, mortgage payments already made, property taxes, and mortgage insurance. Then you should calculate how much equity you have gained so far and the mortgage payments you have already made. Then get a realistic price for the home and calculate the closing costs.

If your home sale price allows you to recoup your down payment, closing costs, and mortgage payments paid so far and nets enough profit to justify equity gained and cover selling costs, you can sell it sooner. It is recommended to sell the house after two years so you can get a tax credit.

When Does It Benefit You to Sell the Home Sooner?

It is possible to make a profit even when you break the five-year rule. Here are perfect situations that will allow you to make a profit when you sell house fast Tampa:

• You have made significant repairs and improvements in the home within a short time. Your home will sell at a better price, and you will recover your money and make a significant profit.
• You got a better deal when buying the house either as a short sale or a foreclosure; you can hold it for some time and sell it at the current market value to make a huge profit.

Other Consequences of Selling a Home Sooner than Expected

In some situations, you can make profits. But here are other consequences that can shrink the profit or make you lose money:

Capital gains taxes – If you sell your home after owning it for 1 to 2 years, you will pay capital gain tax. You will pay even higher taxes if you sell it within a year. The taxes will shrink your profit

Mortgage prepayment penalties – Some lenders have a prepayment penalties clause requiring you to pay the penalty due to selling your home before a specific time. Therefore, read your mortgage agreement before you decide to sell your home sooner.

Lowered perception Among prospective buyers – If you sell your house sooner, potential buyers will think that the home has a problem, and that is why you are selling it fast. As a result, you can get much lower price offers for the home.