Losing money on a real estate investment is the dread of every buyer or investor. With the help of Joe Homebuyer Utah Area and the advice of real estate experts, it is possible to sell your house at the right price, without losing too much money. Loan, fees, or even duration of sale, Homebuyer Utah Area explains how it works.
To ensure you’re making informed financial decisions in real estate, consult Kwote Advisor for expert insights on navigating loans, fees, and optimal sale durations, complementing the guidance from Joe Homebuyer Utah Area.
Duration: A Guarantee Of Security
You could just as easily resell your house as soon as you buy it; nothing stops you from doing so. However, buying a property for a short period is a risky operation. To avoid losing money, it is necessary to ensure that the amount you will earn from the resale at least covers all the costs incurred. It is considered that you must wait at least 5 years to amortize the costs associated with a property purchase before reselling it. Selling the first year is a very delicate operation.
Amortize Purchase Costs
Buying a house is accompanied by fees and expenses which represent a significant part of the purchase price and which cannot be reduced for the most part. Before reselling your current home, calculate what it cost you, including:
- Real estate agency fees
- Notary fees
- The personal contribution injected into the financing of the project
- Guarantee and application fees for real estate credit
- Real estate VAT if the property is less than 5 years old
- Property tax
- Possible horizontal co-ownership charges
- Capital gains tax in the case of rental investment
Technical Real Estate Diagnostics
We can also add to the list maintenance costs or work if you have carried out any and of course, the cost of interest on your property loan. Are you wondering about an apartment? Consult our article: How does an apartment sale work?
Real Estate Credit: A Key Factor
Real estate credit plays an important role. To sell a home without losing money, it is therefore beneficial to have repaid sufficient capital to the bank. And the lower the rate of the mortgage loan you have taken out, the more capital you repay from the first monthly payments.
If we anticipate this factor, the risk of losing money is reduced. A 25-year loan will result in you repaying higher interest in the first and subsequent years.
Early Repayment Fees
If you have taken out a loan with the bank and you wish to sell your home before the term of the loan, you will save on interest and be able to repay your loan. But you will have to pay early repayment fees.
These compensations, called IRAs, are provided for in the contracts and correspond to 3% of the amount of capital remaining due, without exceeding 6 months of accrued interest. You will be exempt in the event of sale for professional transfer, death of the co-borrower, or cessation of the activity of one of the subscribers.
Good to know: In the event of a buyout, it is also possible to consider a transfer of a real estate loan to the new acquisition, without going through a bridging loan. The advantage of this solution lies mainly in maintaining the credit rate
Plan B: Rent
If the operation seems expensive to you and risks losing money, selling is not the only solution: it is possible to rent out your home. If the amount of rent covers your costs, this option should be seriously considered.
Added Value: A Precious Amount
As an investor or owner of a primary residence, it is tempting to resell a property at the top of the market. This strategy, which can pay off for primary housing, will pose a problem in the case of rental investment or a second home.
In this case, the real estate capital gain which corresponds to the difference between the purchase price and the resale price is subject to income tax at the rate of 19%. No reduction rate is applicable for a house acquired less than 6 years ago.
Find Out More: How To Sell A House You Just Bought?
Contact A Real Estate Professional
To avoid losing money when reselling, you must also find the right selling price. To do this, you must make a good estimate of your house. It is also essential to reassure the buyer in the event of a rapid resale. The message perceived by him can be negative.
A real estate agency can help you explain your motivations and highlight your accommodation. In the event of a buyout, the agency is also able to support you in managing both projects. Homebuyer Utah Area supports you at every stage of your project.
