How Long Should You Live In A House Before Selling? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
Feverpitched/Getty Images October 21, 2022 Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Many factors may contribute to a desire to move. Your motives may be strictly monetary, or may be reflecting life changes. Or both. Whatever the reason, you naturally will want to make a profit on the sale — or not lose money, at the very least. But (assuming nothing is forcing you to relocate immediately) is there an optimal amount of time you live in the house before selling it? Unfortunately, there’s no one magic number. To figure out what works in your case, you first need to crunch some numbers. Estimating the costs to close a sale and to move, analyzing local real estate market conditions and — most of all — figuring the amount of equity (outright ownership) you have in your current home are all important factors to consider before. Reasons you may need to sell your home
You have monetary concerns
People often opt to move for financial reasons. Perhaps you’ve lost your job or your income has dwindled significantly, and so you’re looking to downsize. Or you have undergone a divorce or change in your living situation. Of course, there can be happier reasons too: Your income or budget has grown significantly. You’ve gotten married. You want a different home layout and don’t wish to undertake , or the house is in that can’t feasibly be renovated. You need a bigger home
You are expanding your family or caring for live-in relatives, such as aging parents. You need a dedicated home office for . Or you just would like a larger property. It s a seller s market
While you should think of your home as a home first and an investment second, sometimes the housing market seems so that you can’t resist the urge to take the money and run. This is especially true if your property’s value has significantly since you purchased it. How soon can you sell your home after buying it
There is no hard-and-fast answer to this question. But on the whole, the , the better off you fare, financially speaking, when it is time to sell. This relates to the concept of building equity (ownership) in your home. What is home , exactly? It’s the difference between your home’s and what you still owe on your mortgage. In other words, it’s the amount of the home you own outright. If you made the proverbial 20 percent down payment on a $300,000 house when you bought it, your equity — ownership stake — is 20 percent of that, or $60,000. With each mortgage payment you make, you reduce your debt and increase your equity (percentage-wise) a little. The dollar amount of your equity also increases as your home value increases. That’s why it behooves you to wait. Historically, homes have appreciated 3 to 5 percent annually each year. The real estate industry refers to the “five-year rule” as a good rule of thumb when deciding how soon to sell your home. This has to do with the amount of equity the average homeowner has built in their home after five years of possession, and it also takes into account the costs associated with selling a home (and, if applicable, with purchasing a new one). “Five years is a good, comfortable mark,” says Lawrence Yun, chief economist at the National Association of Realtors (NAR). “If the price of your home appreciates considerably, then even three years would be fine, especially if your conditions require relocation.” If at all possible, you will want to ensure the equity you have built in your home will more than cover any selling and moving expenses. What factors must you consider before selling
Covering initial costs
The amount a homeowner nets — or walks away with — after the sale closes is known as their . The first thing to realize: Net proceeds are not the same as net profits. So, to get started, you have to consider how much you paid for the property, and consider how much you owe if you are still paying off a mortgage. Don’t forget to factor in the rise in the and inflation. $300,000 doesn’t buy today what it bought five years ago. The second thing to realize: Your net proceeds are not the same as your home’s purchase price, even if a buyer pays the full amount of your ask. Why? Because there are all sorts of costs associated with selling your home. Some are (see below), which will come out of that buyer’s check, and some are initial costs or incidental ones. For example, you may wish to to maximize its wow factor — the average cost falling between $752 and $2,844, — or at least, have it professionally cleaned. You may also want to make some repairs — freshen the paint, fix that broken window — and do some spruce-ups for curb appeal. If the appliances are old, you may want to purchase a seller’s home warranty to cover them. All this needs to be figured into whether it makes sense economically for you to sell now — and the list price, which you’ll discuss with your . To get started, crunch the numbers. Your goal is to walk away from closing with as much as possible; ultimately, you will want to at least . Paying off closing costs
There are plenty of involved in selling your home: the payable to your real estate agent (around 5 to 6 percent), property and transfer taxes, notary and attorney fees. All of these fall into the category of , which generally come out of the purchase price (you don’t pay them out of pocket, usually). that you as the seller will pay vary, depending on your property and where it is located. Generally speaking, you can expect to pay between 1 and 3 percent of the home’s total sale price in closing costs, according to , though sometimes they can be as high as 5 to 6 percent. Avoiding capital gains tax
Add it all up, and you begin to see where the three-to-five-year rule comes from: It generally takes that long to accrue enough equity to pay off all the prep expenses and closing costs. There’s another number you should keep in mind for hanging onto your house before you sell: two years. And that’s for tax purposes — specifically, capital gains taxes. are based on the net profits (the capital gains) you stand to make from the sale of your house. (Yes, residential real estate counts as a taxable asset, just like a stock). However, there’s a loophole: The homeowners a profit of up to $250,000 ($500,000 if married and filing jointly) before the capital gains tax kicks in. But there are two big conditions: You have to have owned the property for at least two years, and it has to be your primary residence for at least two out of the five years immediately preceding the sale. Finding a real estate agent to help sell your home
to work with can be one of the most important stages of the process. You will want someone who is well-versed in the local market. This person will be responsible for helping you set (and later on, adjust if necessary) your listing price, hosting open houses and showings, negotiating with buyers, and ushering you through the contractual process of . For all of these reasons, you will want to find someone experienced, trustworthy, and pleasant to work with. FAQs
Is it a bad idea to sell your house before 1 year
Even if your home has appreciated speedily, you likely stand to lose money if you sell before the one-year mark. This is due to the capital gains tax, which is high on assets owned so short a time, as well as the costs of closing on a second house so soon.
Can I buy another house before I sell my old one
You can , though this may greatly impact your ability to acquire financing for the new property. You may wish to consider a mortgage contingency as a part of your real estate contract on the newer home. You might also consider , which facilitates the simultaneous selling and buying of properties.
Why should I wait 2 years before selling my house
Once you have lived in a home for two years as your primary residence, the IRS will allow you to realize a profit of $250,000 before exposing your earnings to
Should I hire a real estate agent to sell my house
While you do not require a , the data show that home sales including a seller’s agent tend to net higher offers than homes listed without a credentialed agent. SHARE: Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Related Articles