Life doesn’t always go the way we expect. Sure, you may have imagined yourself living in the home you recently bought for many years to come. But when circumstances change, putting it on the market can start to look like the best option.
If you’ve found yourself in this situation, you may be wondering how soon is too soon to list your property. If you bought it three years (or even nine months) ago, are there any downsides to selling now?
If you purchased your home not too long ago and now you’re thinking of selling, here’s what you should know…
Why You Might Want to Hold Off
Have you heard of the five-year rule? It states that to break even (or make a profit) when you sell your home, you should wait at least five years to put it back on the market. Of course, there are exceptions. But in most cases, it’s true that selling within a few years means taking a financial hit.
To start with, there are the costs you paid when you bought your home (from insurance to land transfer taxes). Then there’s the money you may have put into home improvements. Lastly, when you sell, there’s a whole new set of costs to think about, like legal fees and moving expenses. Recouping that money through appreciation typically takes time.
Mortgage Penalties
If you decide to sell before the date specified in your mortgage contract, you may also have to cover a pre-payment penalty. Typically, this amount is somewhere between 2 and 5 per cent of what you still owe on your loan. That’s no small amount of money!
Buyer Fears
Of course, there are other things to consider. For one thing, if you sell shortly after purchasing, buyers may assume there’s something wrong with your home. It’s unfortunate, but it happens. Not only that, but they’ll likely learn how much you recently paid, which can make it harder to sell for significantly more (especially if the market hasn’t changed much during that time).
Capital Gains
If you do manage to sell for more than you paid, you may need to add capital gains taxes to your list of expenses. If the home you’re thinking of selling isn’t your primary residence, that is. This tax is payable on 50 percent of the money you make on your sale.
The bottom line is, staying put can mean more cash in your pocket. That said, there are times when it may not be the best course of action…
Whether now is the right time to sell or you’re holding off for a while, why not learn a little more about the process by reading some of my selling resources?
- Home Selling Trends in South Etobicoke
- How Much Does it Cost to Sell Your Home in South Etobicoke?
- How to Navigate Bully Offers When Selling Your Home
Reasons to Sell Sooner Rather Than Later
The truth is, the most common practice doesn’t account for every situation. In a market where prices are rising fast, you stand a much better chance of selling early without losing money. By taking a close look at how much you’ve put into purchasing and improving your home—and speaking to an agent who knows the market—you can determine how likely you are to face a major financial loss.
Of course, there are times when the numbers may not be entirely in your favour—and it still makes sense to sell. If you’re reading this post, I’m going to assume you’re probably not a property flipper. In that case, common reasons to sell shortly after buying include the need to relocate for a job, a change in family circumstances (like a new baby or health diagnosis), or a shift in your finances.
As I mentioned earlier, it’s also possible to turn a profit within the first few years if the market is right. An experienced local agent can help you understand current conditions so you have a better sense of what to expect.
If you’re selling your home, chances are that you’re looking for a place that better suits your current needs. You can start your search by checking out my featured listings here.
Making the Right Decision
While it’s possible to make money by selling a home shortly after you purchase it, that’s not usually how things pan out. For this reason, I would suggest thinking carefully before you put up that “for sale” sign. If you can stick it out, you’re bound to get a better return.
At the same time, I know not every homeowner can hold off on selling.
If all else fails and you don’t want to lose money, you can always lease your property. There’s no shortage of renters out there, which means there’s potential to start seeing some substantial extra income!
Still wondering whether now is the right time to sell? I’m here to help! Call or text me at 647-239-7587 or send me an email at melissa@southetobicoke.com to get started.
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