How Soon Can You Sell a House After Buying It?

Real estate is a fundamentally illiquid asset: it costs a lot of time and money to buy or sell. 

Even so, occasionally new property owners find themselves looking to sell soon after buying. So how soon can you sell a house after buying it?

Plenty of factors play into the decision, from your motivation for selling to tax consequences to loan prepayment penalties to closing costs. Keep the following in mind before you decide when to stick it out versus when to sell out. 

Understanding the Basics of Home Sales

Spoiler alert: selling real estate costs a ton of money. 

As a general rule, it costs 8-10% of the home price to sell a house. That includes real estate agent commissions, transfer taxes, recording fees, and other closing costs. 

Those costs don’t take into account the money spent putting the house in “sellable” shape, ready for showings. 

It also takes time to sell a property. The latest Realtor.com data reported by the Federal Reserve shows the average home sits on the market for 53 days. 

And, of course, market conditions matter. Pundits and homeowners alike throw around terms like “buyers’ market” or sellers’ market,” but often fail to understand exactly what they mean. A sellers’ market features more demand than housing supply, typically meaning that there’s less than five months’ worth of housing inventory listed on the market for sale. Conversely, a buyers’ market indicates seven or more months of inventory. Six months of inventory remains the standard for a neutral housing market. 

Interest rates can also affect housing markets — and the affordability for you to buy a replacement home. 

Can You Sell a House Right After You Buy It?

In a word, yes. There’s no law stopping you from turning around and selling a house the same day you bought it. In fact, many real estate wholesalers do just that — a practice known as a double closing. 

But “can” is not the same as “should.” The average homeowner would lose tens of thousands of dollars if they bought and sold a home immediately. 

The following costs and hassles prevent most homeowners from selling a home too quickly. 

Losses from Closing Costs

Real estate requires you to pay two rounds of closing costs: when you buy and when you sell. 

Buyers typically pay 2-5% of the purchase price in combined costs, and sellers often pay 8-10%. To overcome those costs, it takes time for the property to appreciate in value. 

Historically, real estate professionals recommended that homebuyers follow the “Five Year Rule.” If they planned to own the property for less than five years, they should rent instead of buy, because the costs to get in and out of owning the property would exceed the appreciation and any savings on rent.

Today, Realtors tend to take a more nuanced approach to calculating this breakeven horizon. After all, one city might have a breakeven horizon of two years, while another takes eight for homebuyers to recoup the losses from closing costs. Breakeven horizon depends on both appreciation and the difference between local rents and ownership costs. Use Zillow’s breakeven horizon calculator to run the numbers for your own market. 

Hassle & Cost to Put a Home in Sellable Shape

Closing costs aside, it takes some time, money, and hassle to get a house ready to sell. 

To show well, homes must be clean, tidy, well maintained, well landscaped, and ideally have 20-50% less “stuff” in them than the average comfortably-lived-in home. 

Would-be sellers usually spend a month or two cleaning up their homes before selling. They clean out many of their belongings, to make each room look larger. They make neglected repairs, spruce up the exterior and landscaping, and so forth. Often they repaint the home, which may be necessary even after just weeks or months of ownership, because of the scuffs and wear that comes from moving furniture in and out. 

All of this work adds another barrier to selling immediately. 

Mortgage Prepayment Penalties

Many conventional mortgage loans charge a fee if you pay them off too soon after opening them. 

Known as prepayment penalties, these most often appear as a percentage of the loan amount. Federal law allows lenders to charge up to 2% in the first two years of the loan, 1% in the third year, and no prepayment penalty after that. So, if you borrow $300,000 and then think about selling the house three months later, you could pay up to $6,000 as a prepayment penalty.

Seller beware. 

Short-Term Capital Gains Tax

As house flippers are all too aware, the IRS taxes short-term profits at the same tax rate as regular income. That means paying up to 37% at today’s income tax rates.

To qualify for the lower long-term capital gains tax rate, you must hold an asset for at least one year before selling it. Most Americans pay 0-15% as the long-term capital gains tax rate, although wealthier Americans pay 20%. 

Homeowners get a special exemption on capital gains taxes — if they own the property for at least two years. To qualify for the Section 121 exclusion (AKA the homeowner’s exclusion), the seller must have lived in the property for at least two of the last five years. The homeowner’s exclusion gives you a free pass on the first $250,000 in profits ($500,000 for married couples filing jointly). 

Moving Expenses

People often forget about the cost to move, but they do so at their peril. 

According to Moving.com, Americans spend an average of $1,250 on local moves. Longer-distance moves of 1,000 miles or further cost many times more, at $4,890. 

And that says nothing of the headaches of setting up utilities, changing your address, and all the other small-but-annoying things you have to do when you move. 

Spooked Buyers

When buyers see a house come back on the market after just selling a few months earlier, they want to know why. 

A house flip they understand. But a house that someone just bought, moved into, didn’t change at all, and now immediately wants to ditch? That raises red flags in many buyers’ minds. 

Prepare for more wary buyers, if you try to sell a house immediately without making any renovations.

When It Makes Sense to Sell Quickly

Homeowners who find themselves asking “How soon can I sell my house after purchase?” usually find themselves in a dilemma with no easy exit. 

There are cases where it makes sense to sell a home soon after buying it. But most of them involve an intentional business model by real estate investors, not buyer’s remorse among homeowners.

You Must Move — For Whatever Reason

The real world is a messy place. Sometimes you buy and move into a new home, only to have a change of situation. 

A few examples might include:

• New Job: If you or your spouse takes a new job offer that’s just too good to pass up, and requires you to move to a new city, you might need to sell sooner than expected.
• Health or Financial Emergency: An unexpected crisis could hit your family, and leave you suddenly unable to afford the mortgage payment, property taxes, homeowners insurance, HOA fees, and so forth.
• Divorce: The “D” word happens, and never by design. If your marriage falls apart right after you buy a new home, neither party may be able to afford to stay in it. 
• Family Change: If you add a new member to your family, or lose a family member, your needs may change. That one-bedroom condo may have looked great for you as a young couple, but an unforeseen pregnancy could change that calculus. 
• Buyer’s Remorse: Maybe you discover that just plain hate the house, after you move in and live there for a few months. It happens — but it’ll cost you to abandon the house so quickly after buying. 

What must be done can be done, though you may pay a price.

Negative Rental Cash Flow

Rather than selling, some homeowners forced to move soon after buying will try holding onto the property as a rental. 

Unfortunately, most owner-occupied homes make bad rental properties. They don’t cash flow well — if at all. 

That puts the owner back at Square One: selling the property too soon and taking a loss on it.

Actually, it puts them in an even worse position. Renters put more wear and tear on their homes than owners do, and could have caused property damage. Just moving furniture in and out can scrape and scuff the walls and flooring. 

Run the numbers using a rental property calculator before attempting to rent out your home. Remember, rental cash flow isn’t “the rent minus the mortgage.” You have to add in all the irregular but inevitable long-term expenses like vacancy rate, repairs, maintenance, property management costs, and so forth. 

Live-In Flips

Some buyers practice “live-in flipping” as a side hustle or hobby. They buy a fixer-upper, move in, and renovate it on their nights and weekends. Many even use this strategy to flip houses with no money down. 

That said, these DIY-ers often aim to hold the property for at least one year, to avoid short-term capital gains taxes. Or better yet, they stay two years and take advantage of the homeowner’s exclusion. 

House Flipping

Some investors flip houses as a full-time business or as a side hustle. By design, they hold the property for as little time as possible, to reduce their carrying costs. 

But they calculate in both sets of closing costs when they run the numbers on a house flip — along with plenty of buffer for unforeseen expenses. 

Real Estate Wholesaling

Likewise, real estate wholesalers get in and out of properties quickly. 

Many avoid ever taking ownership of properties at all. They simply assign the purchase contract to another buyer. 

Some wholesalers do take ownership of the property, even if only for a few hours. They buy it from the seller, then turn around and immediately hold a second settlement to sell it to their end buyer. 

Again, they carefully run the numbers including all closing costs, using a real estate wholesaling calculator. They only proceed with properties they know they can turn a profit on. 

Factors to Consider Before Selling

You get it: selling soon after buying will likely leave you with a loss. 

Start by looking at your local market conditions. Have they changed in the months since you bought? Is it now a buyer’s or seller’s market? Has your property value changed? Up or down? 

If your local market has shifted to favor sellers, perhaps you’ll get lucky and sell for enough to cover your transaction costs. 

Also double check whether your mortgage loan charges a prepayment penalty. 

Speaking of which, if you find yourself in a new financial hardship, your lender might work with you. Call them and discuss options for a loan modification to make your monthly payments more affordable. 

As touched on above, you can also consider keeping the property as a rental rather than selling. Just be careful to calculate the cash flow conservatively. Hire a professional property management company to advertise it for rent, screen tenants, handle the lease signing and rent collection, and enforce the lease terms. Treat the property as an investment that requires a professional approach, not corner-cutting and amateurism. 

Final Thoughts

Can you sell a house right after you buy it? 

Sure — and it’ll cost you dearly. Watch out for not just closing costs but also the more subtle costs of preparing a home for sale, short-term capital gains taxes, and moving expenses. 

Use just as much caution before committing to keep the property as a rental. If people knew how difficult it was to earn consistent cash flow on rental properties, perhaps they wouldn’t vilify landlords so much. 

Ultimately, you may decide that the loss you take on selling a house quickly is worth it. But go into the decision with eyes open and a sober understanding of just how much it will cost you as you explore how soon can you sell a house after buying it.