You have finally bought the perfect MLS listing in Ajax, settled in, and made it your own. But then, something out of the blue has happened, prompting you to consider selling the property sooner than planned.
So, can you sell your Ajax home a few months or years after buying it?
Technically, you can put the property back on the market on the same day that you buy it. But just because you can sell your home soon doesn’t mean you should. That’s because there are a host of implications that come with selling a home too early.
Let’s learn about this in-depth below!
What Makes Homeowners Sell Their Property Sooner Than They Thought?
When homeowners sell their homes sooner than expected, it’s often due to several common reasons that can unexpectedly alter their plans. Here are the five main reasons why a homeowner would put their new home in the MLS listing Ajax sooner-
Job Relocations - You never know when you may need to move to a different city or even leave Canada for work. This can happen suddenly if you get a new job opportunity or a promotion that requires you to relocate. When this occurs, you may need to sell your home quickly to move closer to your new job.
Health Emergency - A sudden health issue affecting either the homeowner or a family member can lead to the need to sell a home quickly. The medical emergency may require a change in living arrangements such as moving to a more accessible home or closer to medical facilities.
Buyer’s Remorse - Occasionally, homeowners realize that the MLS listing in Ajax they bought doesn’t meet their expectations or needs as well as they thought. This can happen if they don't fully consider all factors before buying it or if they find unexpected issues with the property later on.
Major Life Changes - Events such as marriage, divorce, or the birth of a child can prompt homeowners to reconsider their living situation. They may need more space, decide to live closer to family or make other adjustments. This results in selling their current home sooner than planned.
Financial Hardship - Unforeseen financial challenges such as job loss, unexpected expenses, or changes in the housing market can make it difficult for homeowners to afford their mortgage payments. In such cases, selling the MLS listing in Ajax may be the best option to avoid foreclosure or to prevent stretching finances too thin.
What Happens When You Sell Your Ajax Home Too Soon?
Selling your home earlier can greatly impact your finances, affecting your overall earnings more than you realize. Whether it’s for personal reasons, financial needs, or a change in your plans, it’s important to know what to expect when thinking about selling your home early.
Here are the possible downsides of selling your Ajax property too soon -
Mortgage Prepayment Penalty
One of the most impactful financial hits you might face when selling early is the mortgage prepayment penalty. Essentially, the penalty is a cost imposed by lenders from whom you have taken the loan to buy the Ajax MLS listing. They levy this penalty to compensate for the interest they would have earned had you continued the mortgage as agreed.
The prepayment penalty varies based on your mortgage terms and how long you have held the loan. But it can typically range from 2% of the remaining balance to several months’ worth of interest payments.
No or Less Home Equity Build-Up
Home equity is the difference between what you owe on your mortgage and the market value of your Ajax home. Over time, as you make monthly mortgage payments, what you owe on the loan decreases, and your equity in the home increases.
Also, ideally, the market value of an MLS listing in Ajax increases over time. This means your home will be worth more than what you paid for it, further adding to your equity.
Hence, selling too soon limits your buildup of equity on the Ajax home. You might even end up selling for less than you paid, especially if you haven’t owned the home for long and haven’t had much time for appreciation.
Selling Costs
The costs that you have to incur while selling the property can also eat into your profits. First, you have to pay the real estate agent commission fee, typically around 5-6% of the sale price.
Other selling expenses may include staging the home to attract buyers, making repairs or renovations to increase market appeal, and covering closing costs such as title insurance and attorney fees. These selling costs can quickly add up, reducing your overall profit from the sale.
Moving Expenses
Home sellers often turn a blind eye to moving expenses. After all, it’s easy to get caught in the potential profit from the sale of the Ajax MLS listing and overlook the costs of getting yourself and your belongings to your next place.
However, moving costs from your Ajax home to the new property can put a serious dent in your finances. The further you move from your old home and the more belongings you have, the more expensive the whole process will be. Hence, if you haven’t owned your home for long and haven’t built much equity, the moving expenses can burn a hole in your pocket.
Tax Implications
Tax implications are another crucial thing you must consider when selling a home early. Depending on how long you have owned the home and whether it qualifies as your principal residence, you may be subject to capital gains taxes on the profit from the sale.
The capital tax rates of an MLS listing in Ajax can be a huge expense, especially for short-term ownership. However, if you have lived in the home for at least two of the last five years before selling, you may qualify for a capital gains tax exclusion. The capital gains tax exclusion is for up to $250,000 for single filers and up to $500,000 for married couples filing jointly.
When Can You Consider Selling Your Ajax Home Sooner?
Here are some situations when it might make sense to sell your Ajax home sooner -
Financial Gain - If you can make a significant profit due to a rise in property value shortly after buying.
Life Changes - Unexpected changes like a job relocation or family situations that require you to move.
Maintenance Costs - If the home needs costly repairs soon after buying that you can’t afford.
Market Condition -A hot market where MLS listings in Ajax are selling quickly and at good prices.
Investment Strategy - When flipping homes is part of your home-buying plan and the timing aligns with your goals.
Financial Relief - Avoiding financial strain or mortgage difficulties by selling sooner rather than later.
Hold Off on Selling Your Home Too Early if Possible
Think twice before selling your first home too soon, unless it’s absolutely necessary. After all, your Ajax home is more than just a place to live - it’s an investment in your future.
Selling too soon can mean missing out on potential long-term gains in value of the MLS listing in Ajax. Also, when you sell a home shortly after buying it, you might not recoup all the costs associated with buying and selling. Hence, before making a decision, weigh the financial implications and consider getting help from a Realtor to understand alternative options.