Can I Sell a Home After Owning It 1 Year?

Unforeseen circumstances can precipitate a move sooner than expected. The most common reason for selling a house after one year is job relocation, according to Brad Gore, a top agent in Branson, Missouri. Other reasons can include:

Unexpected situations signaling the need to move within a year of purchasing a home can prompt questions: “Has my home appreciated enough that I will make a profit … or break even?” or “Can I sell a home after owning it for one year?”

You can sell a home whenever you want, but expect financial consequences if you have little equity in it. Don’t forget all the fees associated with selling a house — and the potential for owing capital gains tax.

These are all considerations that form the basis of the proverbial “5-year rule” for selling a house.

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What is the 5-Year Rule for selling a house?

The 5-year rule is pretty self-explanatory. Generally, the longer you keep your house, the more likely you are to make a profit when you sell it. Those who sell their property before owning it for five years risk losing money on their investment.

There are a number of reasons for this, including a lack of equity accumulated in the home and insufficient appreciation — an increase in property value.

Appreciation derives from a variety of factors, some of the most common of which include:

  • Location: Some parts of the country are more attractive to homeowners. Cities offer many amenities — although some buyers prefer a quieter, more rural setting. Nevertheless, proximity to employers, restaurants, shopping, and other attractions can enhance a community’s value … as well as that of your home. Being adjacent to parks and green spaces can add 8%-20% higher value. Low crime rates and good schools can add value. Some HOAs can, as well.
  • Supply and demand: Inventory has slightly increased, and the prices have increased about 0.9% from last year. Changing interest rates and property buying priorities impact the appreciation of existing homes.
  • Comparable properties nearby: Known as real estate comps, recent nearby home sales affect the sale price and value of your home. In a seller’s market, prices typically rise, which could effectively boost equity in your home and increase appreciation.
  • Size and usable space of your home: Numbers don’t lie, but they may not tell the whole story, either. If you have built a home addition or finished an attic or basement, that’s more usable square footage, which can increase your home’s value. Accessory Dwelling Units (ADUs), such as a detached mother-in-law house, have been known to add roughly 30%-35% value.
  • Age and condition of your home: An appraisal provides a good assessment of your home’s general condition. Age does not necessarily detract from your home’s worth, as long as quality materials and building practices were used and the home has been renovated or at least properly maintained. Gore advises homeowners to keep their homes in good condition. “Fix things. Don’t give buyers a reason to chip away at your asking price.”
  • Upgrades and updates: Even though homes are built to last, changing trends can necessitate a remodel. Kitchens and baths remain the most popular rooms to upgrade — as well as the most expensive. Just be careful not to over-improve. If you know you’re going to be in the house only a short time, Gore recommends not doing major remodels. Smaller modifications, such as fresh paint, can add 2%-5% to a home’s value and allow you to keep cash in hand for your move.
  • Health of the economy: With inflation comes rising home prices. Conversely, prices typically drop during a recession.

The latest average appreciation rate in the U.S. is currently around 0.64%. That’s down from a rate of 0.87% the previous month.



from HomeLight Blog https://www.homelight.com/blog/can-you-sell-your-home-after-1-year/

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