Blog Investing How Fast Can you Sell a House After Buying It?
How fast can you sell a house after buying it?
Find the best places to invest

How Fast Can you Sell a House After Buying It?


When you purchase a property, you have every right to do with it as you please, provided it’s not illegal or dangerous. But theoretically, if you buy a house today, you can sell it the next day if you want to. But that might not be the wisest or most practical thing to do. And practicality matters a lot, especially in this day and age. 

This leads us to the question of how fast can you sell a house after buying it? Let’s talk about it in greater detail. Read on. 

Why Do Some Homeowners Sell a Property Sooner Than They Expect?

Homeowners have several different reasons why they decide to have their properties listed. We all go through different opportunities and challenges that lead us to pretty big decisions that can greatly affect our lives, including selling a house. Here are the most common reasons why folks sell their homes a lot sooner than expected: 

  • Change in career direction. A lot of times, folks decide to sell their homes because their job calls for it or it’s just more practical to relocate to a home that’s closer to one’s office or workplace. 
  • Change in the family situation. As people go through the different stages in life, their need for space changes as well. Perhaps a newly-married couple is expecting their first child or a new baby is on the way for couples already with kids. Or perhaps the kids are moving out and empty-nesters feel the need to downsize. In some cases, a death in the family is enough for people to want to move to a new home to get over the grief and the trauma. 
  • Change in financial status. Nothing in life is ever certain. The COVID-19 pandemic proved that. People ended up struggling financially because of it which led to challenges in mortgage payments. Even without the pandemic, the possibility of someone getting laid off from work, property taxes increase, or unexpected costs rising is still highly probable. Any drastic and dramatic change in a person’s finances could leave them with no choice but to sell their home. 
  • Health and medical emergencies. Sometimes a person’s medical condition might require them to free up equity to cover their health and living expenses. In some cases, people decide to have their properties listed so they can move closer to a sick family member so they can watch over and take care of them.
  • Condition of the seller’s market. Sometimes homeowners just want to take advantage of an opportunity to make a profit in a hot seller’s market. Some of those who gain equity quickly prefer to sell their house at a profit and just buy another one. 
  • Buyer’s remorse. Impulsive buyers often experience buyer’s remorse, especially when they have grown unhappy with their purchase.

These different reasons may be what some homeowners have when they ask people the question, “How fast can you sell a house after buying it?” These are what get them to that point of prematurely listing the property on the market. And although real estate investment is one of the most lucrative and foolproof types of investment there is, it only takes one bad decision to spell the difference between gain and loss. 

How Soon Can a Homeowner Sell a House Without Losing Any Money?

Technically, it’s not a matter of how fast you can sell a house after buying it. Instead of asking,  “how soon can I sell my house after purchase?,” the question to ask should be, “When can I sell my house without losing money?

Given the different reasons people unexpectedly sell their properties, they all come with certain financial risks. For this reason, people who are seriously thinking about selling their homes way ahead of time need to consider a few things first before making any final decision. 

Federal Housing Administration Guidelines

One of the very first things prospective sellers should consider is Federal Housing Administration, or FHA, loans. These government-insured loans are used by plenty of buyers in purchasing properties. According to the FHA’s guidelines, a person will have to own the property for 90 days before it insures the loan used to purchase the said property. Since most buyers are inclined to use FHA loans for home purchases, the number of potential buyers for the property a homeowner intends to sell (which is under 90 days of ownership) will shrink. Potential buyers considering the property will be forced to take the conventional financing offered by private lenders or some other viable option.

With the smaller number of people qualified to purchase the property, the amount in which the property could sell for will also go down significantly which, at the risk of stating the obvious, will count as a loss to the seller.  

Fees and Charges

Homeowners should also know that selling a home is quite pricey. Putting a property up for sale is a very expensive process. There are plenty of fees and charges involved in selling a house like the following: 

  • Closing costs
  • Title fees
  • Commissions
  • Escrow fees
  • Prepayment penalties

Those are just some of the things that will eat up a significant amount of your money. These things add up pretty quickly. At this point, it is a must that a homeowner looking to sell gets guidance from a professional that knows the ins and outs of the process. A licensed real estate agent is your best bet. If you don’t know any real estate agents in your area, Mashvisor’s real estate agent directory is the right tool to help you locate the top industry professionals near you. 

Sign up for Mashvisor now and get 15% off.

The Five-Year Rule

One of the more common mindsets folks have about investment property is that you need to have lived in the house for five years to break even on their initial investment. It takes time for a property to build equity. And real estate is one of those things that age like fine wine – the older it gets, the more valuable it becomes. 

In a general market, a property’s value increases between 2% to 2.5% annually. When a homeowner sells a property, the average sales cost is around 10% of the purchase price. This 10% all goes to the different selling costs already mentioned above. So if we go with an annual appreciation of 2%, it will take 5 years for the property to gain enough value to cover the 10% average sales cost. 

The Breakeven Horizon

That being said, homeowners looking to sell should always consider breaking even on their investment, at the very least, before selling. While the five-year rule is a very safe way to go about it, there are always a few exceptions to this rule. 

Sometimes, it takes less than five years for a property to gain enough equity to offset ownership costs, as well as the transaction costs of buying and selling. In other cases, it takes a bit longer. 

The housing prices in a normal market fluctuate so it’s very important that sellers know how to calculate right and be as accurate as possible to minimize the losses if there is a need to sell fast unexpectedly. 

Doing the Math

While selling is something homeowners can do at any time, it is recommended that they live in it (or hold on to it) for at least two years before selling.  The assumption is that under normal market conditions, two years is enough time – hopefully – for the property to gain enough equity to offset the closing costs. This also has certain tax benefits whether you’re single or married. 

But if you really need to sell fast and cannot wait two years, you need to do the math and get it right. Knowing the numbers you’re going to get will help you manage your expectations, plan better for them, and minimize stress. 

Figure Out the Fair Market Value

The very first thing a seller should do is find out what the present fair market value of the property is. Those who are working with real estate agents can be guided accordingly. For those who don’t have agents to work with, they can have their homes appraised by a professional. 

We strongly recommend working with a real estate agent closely as he or she can help determine a property’s market value, use neighborhood comps, provide in-depth market analysis, and suggest listing prices. 

Don’t Forget to Factor in the Closing Costs

Once the property’s market value is determined, the closing costs should be deducted from it to get to the projected sale price. 

  • Buyer closing cost. Buyer closing costs are typically between 2% and 5% of the property’s purchase price. It is important to note, however, that in most cases the buyer asks the seller to cover the closing costs during the negotiation period. So if a seller is going to use his or her settlement statement as a reference, it is quite possible that he or she didn’t pay much on the home purchase. 
  • Seller closing cost. On the other hand, the seller’s closing costs can go from 8% up to 10% of the sale price. A huge chunk of this is used to pay agents’ commissions and fees. So, if a property is valued at $200,000, the closing costs can go anywhere between $16,000 to $20,000.

Subtract the seller prep costs and mortgage payoff amounts from the property’s projected sale price

On top of the closing costs, sellers also need to prep the house before having it listed. Zillow’s research states that sellers who work with professionals to physically prepare the property spend an average of $6,570.

Additionally, the mortgage payoff amount also needs to be subtracted from the property’s projected sale price along with the prep costs. Sellers who have lived in a property for less than two years couldn’t have made enough of a dent on their mortgage since most of the monthly payments, in the beginning, all go to interest and not the principal amount. This means that the payoff amount won’t be significantly lower than the original amount financed. 

Unless the homeowner has been making lots of extra payments on principal monthly, mortgage payments alone are not enough to take care of the costs and break even.  

Getting the right numbers can help shed light on the topic and answer the question, “How fast can you sell a house after buying it?”

Why Shouldn’t a Homeowner Sell Early?

So, how long after buying a house can you sell it? When should a homeowner hold back? What are some factors that should make homeowners reconsider selling fast? 

Capital Gains Taxes

As we hinted at earlier, certain tax benefits come with staying in a house for at least two years. Individuals are exempt from capital gains taxes on the sales profit. It could go up to $250,000 for an individual and $500,000 for married couples. 

However, if a homeowner decides to sell before the two-year mark, capital gains taxes will be put in effect. Be sure to consult with a professional tax advisor to get more insight on this matter. 

Prepayment Penalties on Mortgage

Some lenders charge prepayment penalties on properties that are sold within a specific time frame after their purchase. Homeowners need to understand that lenders are running a business that’s designed for profit. These prepayment penalties are one of the ways for them to recoup some of the interest payments they will be missing since the loan is getting paid off a lot sooner than expected. In most cases, the penalty amount is between 2% and 5% of the loan balance. Other times it is a percentage of the interest owed or just a flat rate. 

Lowered Buyer Perception

Nowadays, with listing history easily accessible online, potential buyers and agents can see the date and amount of purchase of a property. If they see that property bought less than two years ago is already up for sale, they might assume that there’s something wrong with the property and are likely to lose interest in it. 

Unless the seller clearly states the reason for selling, the negative perception will likely lead to fewer and lower offers. 

So How Fast Can You Sell a House After Buying It?

The short answer to the question, “How fast can you sell a house after buying it?” is anytime after the closing day. But it doesn’t mean that it’s the smart thing to do, especially if your goal is to make money off it. Selling quickly, in most cases, will only leave you with a loss and a really bad case of seller’s remorse, especially if there are no strong compelling reasons to put the property up for sale. So before making any rash decisions, make sure to talk to the right people first. 

We at Mashvisor can help you make the smartest decisions when it comes to investment properties. Call us now so we can help you sort things out. 

Start Your Investment Property Search!
Start Your Investment Property Search! START FREE TRIAL
Alfred Lauzon

Alfred is a content writer with years of experience writing about the US housing market. He has a natural inclination to the arts and creatives. One will often find him drawing, doing toy photography, or dabbling in other geeky stuff when he's not helping investors make smarter decisions.

Related posts

19 Different Real Estate Careers: Which One Is Right for You?

In the Spotlight: Property Score Filter, Email Alerts & More

The Best Place to Buy Condo in Florida: Investor’s Guide