Will You Lose Money If You Sell Your Home After Only a Year?
Many homeowners ask if they can sell their home only a year after they purchased it, and if they will lose money if they do so. Truth is, anyone can sell their home if there are no other problems involved with it. However, if you have a lot of issues with the house then you might lose money. How can you avoid this? This article can help you with that so read on for more.
Why People Sell Their Homes After a Year?
There are plenty of reasons why people sell their homes and in the US, it is very common for people to let go of their property even if they have only stayed there for a year or less. But why? Here are common reasons why people do:
This sounds like nonsense but many residents sell their house for this reason but it does not mean that the house is bad. It simply means that they may have changed their minds or they thought that it was the house they wanted. It could also be due to the fact that the house is too small for their family size or they don’t like the neighborhood after a few months of living in it.
Short on Finances
One of the main reasons why people sell their house even if they just lived there for a year is due to financial reasons. Yes, it could be an emergency and they need the money or it could also be due to repairs that they don’t want to handle. Some people think it’s better to move out rather than keeping up with the maintenance and so selling it would be their last resort. In other cases, some people don’t want to pay mortgages for long so selling is the best option to do so.
Selling a house because of a new job or school is sometimes the reason for this. It could also be because they want to live closer to family or have changing priorities, so selling their house is a good option to take. Some people are also tired of their old life and want to do some traveling. Experiencing new things and settings could also be a good reason why people sell their homes.
A death in the family, changes in relationships, getting ready for retirement and empty-nesters are usually among the many people who choose to sell their home. This does not make the house bad but rather an old chapter that some people want to pass on to someone else through selling.
How to Avoid Losing Money When Selling Your Home
The inevitable answer to your question is that, yes, you can lose money on this. If you are planning to profit from your house by selling it, remember that you still have to pay capital gains tax. These are up to 20% of the profit you can get assuming that you owned the house for a year. If you want to sell the house in less than a year after you bought it, higher capital gains tax rates are to be expected. At this point, it is very unlikely that you are going to make any profits in less than a year so you have to focus on minimizing your losses and the biggest expenses that you can pay are the commissions on both the agent representing the buyer and the listing agent. All in all, they can eat up 6% of your house’s value so if your house is evaluated at a low price plus the agent fees, then it is more of a loss than gain on your part.
If you want to avoid losing money then here are some tips that you can do:
- Hire an experienced listing agent – an experienced listing agent can find more ways to market your house and offer you better service charges. Yes, you can still lose money but not as much. If you choose to hire a cheaper agent, you might just lose more money in the end. An experienced listing agent on the other hand has the knowledge and details you need as well as familiarity with the housing market. They can also help you compare sales to avoid overpricing your house or selling it at the wrong time.
- Get the right price for your home – it is a fact that the longer your house sits on the market, the more it’s value depletes. Listing your home with the right price helps shorten the time it has to stay in the market. An experienced listing agent is familiar with your neighborhood and can help you come up with the right price by comparing prices with other listed homes. You can also ask your bank with an accurate payoff figure so you have a starting point on how to price your house right. Knowing the trends among open houses can also give you an idea on how to make your house more appealing so you can sell it quick.
- Give your home a makeover – the makeover you do does not have to be general. Choose parts of the house that you needs simple repairs. Add fresh paints to make your house look likely and new. It doesn’t take too much to add more life to your home if you wish to sell it fast.
- Check the fees in the sales contract – there are a number of fees that the buyers and sellers will pay. In addition to that, the buyer may check the inspection reports or seller concession when you are nearing closing costs. All of these are negotiable and if they ask for a 3% towards closing costs, you must consider increasing the sales price in order to compensate.
- Consider renting it out – if you haven’t made up your mind on actually selling, you can have your place rented. Be the landlord of your place while you make profits and avoid losing the money you have invested.
If you really want to sell your home within a year, you can do so but you have to pay capital gains taxes for this and trust me, they are not as cheap. You can choose to sell your home or you can stay in it for a little while to avoid paying these taxes. All in all, the choice of selling your home is up to you. So make sure that you consult real estate experts first before you sell your home, otherwise, you will be wasting your investment and will walk out with lower profits than expected.