The short answer is ‘yes’ you can sell a house immediately after buying it. There aren’t any rules or laws stating you can’t.
The bigger question is should you sell a house immediately after buying it? If it’s your primary residence, there are many factors to consider including capital gains and breaking even. If you’re buying homes as an investment, there are still capital gains concerns, but you’ve likely worked that out in your plan otherwise you wouldn’t be a real estate investor.
What Should You Consider?
The largest factor is the break-even point. This is the point it makes financial sense to buy and sell quickly. Why consider this point?
It costs money to buy a home. Between the closing costs on the loan and the costs the county charges, you’ll have more money invested than your down payment. If you can’t sell the house for more than what you put in, you walk away with a loss – probably not what you imagined when you originally chose to invest.
On top of that, it costs money to sell a home. That sounds crazy, right? You have to pay to have someone buy your home?
The costs vary based on how you sell. If you use a real estate agent, expect commissions between 3 and 5 percent of the sales price. Even if you sell the home yourself, you’ll pay title and escrow fees. These fees take away from your profits and could even land you upside down.
Why Should You Sell Your House Right Away?
Ideally, you shouldn’t sell your house right away, unless you’re an investor that bought the house with the intention to flip it. If you did, you’ll have a plan worked out that includes recouping the cost to buy the home plus enough to make a profit.
Investors work the figures into their budget including the cost of renovations and compare it to the potential after-repaired value aka new sales price. If you bought the home to live in yourself, selling right away usually isn’t ideal unless you know the home appreciated quickly. In rare circumstances this happens, but it’s not the norm.
The main reasons to sell your house right away are:
- The neighborhood dynamic changes fast. Sometimes neighborhoods change due to new construction, a change in the atmosphere, or a slew of neighbors moving out and new people moving in that don’t vibe with the neighborhood.
- You can’t afford it. Of course, if you find that you can’t afford the mortgage after buying, it’s best to sell the home. Waiting until the bank starts foreclosure proceedings damages your credit score and your credit history for as many as 7 years. It’s not worth trying to fight it if you can’t afford it.
While you might take a loss, it’s better than going through a foreclosure or holding on to the property hoping to sell it later. As a fix and flip investor it’s important to bear in mind that the longer you hold the property without selling it, the higher the cost will be to you.
How To Sell A House Right Away
Selling a house right away isn’t much different than selling a home you owned for a long time. The biggest concern is the pricing. While you can’t price it for more than it’s worth, you want to try to get most of your investment back if you can.
Selling the house yourself will save you on the real estate agent commission which is thousands of dollars, so definitely start there. Talk to a licensed appraiser about the best price too – pricing it too high will turn buyers away but pricing it too low leaves you with little money in your pocket.
While it’s not ideal, you can sell a home right after you buy it. To avoid a loss, do your homework and make sure you can afford the home before you buy it. Look into any demographic issues or new construction that is a possibility (there should be records of upcoming work), and make sure you have a good idea of what could happen to the neighborhood in the future.
Selling a property right after buying it may not be the easiest strategy, but with the right approach the investor can ensure that they suffer minimal losses.