Selling a House Within a Year of Purchase: What to Expect
Selling a house within a year of purchase is something that we’ve run in to recently, and you’re essentially flipping a home. Whether it’s divorce (sorry), being relocated for a job, or a family emergency, life doesn’t always go as planned. In any event, selling a house, condo, or town home shortly after you bought it isn’t always ideal – and in a stagnant or declining market you might actually lose money. Luckily for most people in this scenario today, the market is rising drastically. Regardless, here’s what you need to know:
Assume you won’t come out ahead
By the time you factor in property transfer taxes, legal costs, and real estate commissions it can be pretty difficult to come out ahead when it comes to selling a home you just bought recently. It will completely depend on the market and whether or not it’s gone up significantly, but there are more costs associated with selling than buying. So have your realtor do a comparative market analysis for you and determine a strategy that best meets your need to sell and also minimize any loss.
The buyers will know the reality
Anyone working with a realtor is going to be able to check the history of the home, when it was last sold, and how much it was sold for. They’ll be able to determine how much prices have gone up in the neighbourhood compared to when you bought it.
Given that the previous listing pictures are probably still up on the MLS, the buyers will know whether or not you’ve done any renovations. If the market has been pretty stagnant, they’re not going to understand why the townhome you paid $700,000 is worth $800,000 6 months later. However, if you got a good deal on it and the market has risen significantly, then you may be able to make a convincing case without any renovations being done.
You might want to consider renting it out for a bit
If the market is stagnant, or worse off gone down – then you might want to consider alternative options to selling. You can have a renter come in and hopefully cover the entire mortgage payment (and possibly even a bit more) and hold the property until you break even or make a profit. However, if you think the market is going to decline over the next 5 years, then it might be best to take your losses, sell while it’s decent, and walk away.
Getting greedy isn’t going to help
Nobody wants to lose money in real estate… well actually, no one wants to lose money in anything. At the end of the day, if you’re selling a home you purchased within the last 12 months, then you probably need to sell – otherwise you wouldn’t be bothering with the hassle in the first place. So remember, your goal is to sell your property.
If you overprice it, then the home is going to sit on the market until the price is adjusted to the market value anyways. The longer your home sits on the market, the more buyers think that they can low-ball you and waste your time with ridiculous offers. Whatever circumstance got you in to selling your home, expecting more than market value will just cause you more stress overall.
It’s interesting how people that need to sell shortly after they buy it expect their realtor to magically make them break even, or lie to them about the listing price and how much money they can get for their new home. Don’t choose a listing realtor based on how high they want to list your property, choose a realtor that is going to price it smart based on your needs. Don’t expect your realtor to cut their commission to make the math work out better, the best realtors won’t.
At the end of the day, selling a house within a year of purchase is harder than selling a home that was last purchased 10 years ago – so you’ll want someone with tough negotiation skills, an insanely awesome marketing plan, and a smart listing strategy.
With all this being said, have your realtor do up a comparative market analysis for you and estimate all of the closing costs to help you determine what the best route is for you. Selling a house within a year of purchase isn’t really much fun, but sometimes life is full of surprises.
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