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How Soon Can I Sell My House After Purchase?

A millennial couple talking with their real estate agent about selling their home

If you recently purchased a home then you can technically sell it at any time. That property is yours to do as you wish, including selling the home immediately after purchasing. That said, what you can do and what you should do are two very different things.

Of course you can sell it at any time, but should you? If you sell too soon, not enough time will have passed to allow your home to appreciate in value. Therefore, expect to lose money by selling early because there will be little to no increase in home appraisal value in such a short time. The reason for the loss is mostly attributed to the closing costs associated with selling a home — keep reading to learn more.

Nevertheless, if you are reading this, I assume you still want to know all the considerations so you can make the decision for yourself. Here are some common follow-up questions that should be analyzed before you decide to immediately sell your house. Even if you do have a buyer lined up, there are some details surrounding the sale that you need to be aware of.

Is it bad to sell a home before a year?

While it’s not suggested that you sell your home before a year, it technically isn’t bad if you decide to sell before that full year mark. The basics of selling a home before a year don’t add up because you would’ve probably been better off renting a home instead of buying. It’s less responsibility on your hands if you decide to rent a home and you don’t have to pay for extra expenses like closing costs, property taxes, and other fees that can add up to thousands of dollars quickly.

You’ll also be forced to move everything out of a home that you just purchased within a year and that can take a lot of time and effort. It takes most people a month or longer to get a house ready to sell. 

Obviously, deciding whether or not to sell your home within one year of owning it is up to your specific situation. Financial situations change all the time and it’s possible that selling within 12 months is the best situation for you.

  • Job change
  • Changes in the housing market
  • Family concerns
  • You don’t like the location

There are four common reasons you might need to sell your home before a year that you might want to consider:

Is it bad to sell a house after one year?

It may or may not be bad to sell your home after one year, depending on the number of factors. If the time period is just over one year, then selling your home is still not recommended because of the financial burden. There are closing costs, taxes, and potentially attorney fees when you sell your home. If your home has not appreciated enough in that brief time, then you will have to pay out of pocket for the additional expenses.

Keep in mind, if you sell your home at any time, which includes after one year or 30 years, then you’re going to have to pay capital gains tax on the profit you made. You’ll also get hit with another round of closing costs after you just paid closing costs in the year prior. But note, the federal government has a law that states a home seller does not need to pay taxes on profits under $250,000 for the sale of their primary residence (double this if you are married). 

On top of that, you’ll more than likely be forced to pay for a real estate agent who can help you sell your home. You might even be forced to meet with your lender and explain why you decided to sell the home early. Even though you passed the 6 month range, some lenders will still want insight about why you’re selling your home so quickly after buying it. Maybe there are faults in the property that you found and they want to know about. 

Even with the recent spike in home valuations, in one year of owning a home you likely build such little equity in your home that it doesn’t make much sense financially to sell at that point unless absolutely necessary.

What is the 6 month mortgage rule?

Maybe you are looking to refinance instead of selling your home immediately after purchasing. This has the benefit of allowing you as the homeowner to keep ownership of the property but also re-adjusting your mortgage and possibly taking out some cash. That said, keep reading to learn about the 6 month mortgage rule that may prevent you from doing so.

Although not directly applicable, it’s worth mentioning a rule of thumb that was born from the financial crisis. The 6 month mortgage rule is not a law, but more of a guideline developed to help lenders and banks. It only affects homeowners who want to refinance. Depending on who your lender is, they might abide by this guideline and not lend you money within the first 6 months that you own a property. Until a homeowner has been registered as the owner of a home for at least 6 months, some lenders can make it near impossible for homeowners to permit new borrowing against a property. 

It’s important to note that not all banks and lenders are like this. Some strictly abide by it while others only use it as a guideline or might even completely ignore the guideline. Since it’s not a law, every bank or lender has the ability to use it at their own discretion.

By selling your house before paying off the mortgage within less than 6 months and selling your home, you take the risk of possibly running into complications of the 6 month rule with your lender. As previously stated, it all depends on who your lender is and how they follow the rule. Since it’s not law, they cannot take legal actions or force you or any other lender into anything. It’s just good knowledge to have if you plan on selling your home within half of a year. 

Referencing back to the original problem, yes you can sell your home at any time but you might run into the 6 month rule as a problem depending on who your lender is. 

The bottom line about how soon you can sell your property

At the end of the day, if you really want to, you can sell your property the very next day after you purchase it. You need to be aware that doing this will cause complications with your current lender and most future lenders. It’s because your lender gave you the money with the intention of making money from you in the form of interest and wasn’t able to do that. Even if you wait longer than one day to sell your home, if you don’t wait at least 6 months then you’re almost guaranteed to run into trouble with lenders.

On top of that, the financial burden you could possibly accumulate by quickly selling a home you just bought could be high. You’ll have to pay capital gains tax on the money you earned by selling your house, you might have to pay closing costs twice, and property tax twice.

While there are many situations where buying and selling your home quickly might be the right thing for you to do, it’s still ill-advised. Unless you absolutely have to because of your job, your family, or some other personal reason then you should not simply sell your home quickly.

Disclaimer: The above is provided for informational purposes only and should not be considered tax, savings, financial, or legal advice. All information shown here is for illustrative purpose only and the author is not making a recommendation of any particular product over another. All views and opinions expressed in this post belong to the author.

Scott Teesdale

Written By Scott Teesdale

I use data and technology to help Millennials navigate the ins-and-outs of buying or selling a home in today's market. From appraisals to mortgages to zoning, I cover it all with the goal to teach others. Connect with me on social via the icons above.