To sell my house?

Question

I need a sanity check, or more what am I missing.

In Raleigh NC. I bought the house in March, the house next door just closed for 130K more than what we paid. It is 4/2 and 40 sq ft larger no garage. Mine is 4/2.5/ garage. The house across the road is ~600 sq ft smaller a 2/2 no garage and is under contract for 40k more than what I paid.

I am seriously considering putting mine on the market. If I can make 80-100K I feel like I may be stupid not to.

What am I missing? What am I not taking into consideration? What are the tax implications since I have not owned it a year?

Tom V. · Answer

If you're in a hot market and homes are being snatched up within 2 days of listing for full asking price, then you may have a difficult time finding a new home to live in at a reasonable price. You may sell your own house at a great price, but then have to pay inflated prices for your next home. That would be one consideration that comes to mind.

Keith N. · Answer

@Chad W.  Well, the whole point of real estate investing is MAKING MONEY after all.  I'd say go for it as long as you're sure the comps you're talking about are accurate.  Talk to a smart realtor who knows the area, and do your homework.

Dawn Brenengen · Answer

@Chad W. You still have to have a place to live.  Would you be moving down or buying a bigger and better home?

I have seen a number of people get really excited about all the equity they have in their homes, sell for a profit and then buy an even more expensive home.  What they don't realize is that they are actually losing money by doing this.  They should have sold when they were in a more down market, then they could have moved into the more expensive, yet also price suppressed home.  A hot sellers market is NOT the time to move up.

Alex Yost · Answer

Sounds like you got a great deal!  The biggest challenge I see is what @Tom V. mentioned.  What can you buy with the money?  At a minimum, you may want to consider @Austin Youmans idea about getting a credit line.  That could come in handy in the future!

Ned Carey · Answer

And where are you going to move? What will be the cost of that?

Steven Hamilton II · Answer

Ideally you need to make it through at least two years there. One year would at least put you in long term capital gain territory though.

Adam Schneider · Answer

@Chad W. Yes, the Raleigh market is experiencing a frenzy right now, isn't it? I was talking last week with a guy who has been renting his house for 15 years, and recently kicked out the tenants, undertook a full reno, and put it on the market...said he couldn't pass up the opportunity to take advantage of the market.

Check with your CPA. You should at least understand the impact of not having to pay taxes...living in the house for at least 2 of the last 5 years (what Uriah was referring to)....if you purchased as an entity and had INTENDED to hold it when you purchased it, your tax rate could be different than if it's just a flip (see Brandon Hall's absolutely outstanding article on differentiating between ordinary income tax and capital gains...)

You could always list your property for sale and see if the market likes your house as much as it likes the other house. That's what I'd do secondarily based on you exploring the situation (full disclosure--I'm a broker).  The first thing I'd do is consult the CPA.

Best of luck--I'm jealous of your equity (in a good way).

Austin Youmans · Answer

It depends.. the seller might of just got lucky with a certain buyer that fell in love.

What would you do with the money?

Why not just refi and pull the money out or get a line of credit?

Dawn Brenengen · Answer

@Chad W.  As long as you are buying a cheaper home, it can make sense to sell it. It IS very tempting to realize those gains!

Chad W. · Answer

@Dawn Brenengen We are looking at buying a cheaper house with much more equity/ or 2 quality rentals one we live in and one to rent.

I know the houses we are looking at might be up in price as much as ours has risen, but the cheapest thing in our zip code is 100k more than what I paid.

To sell my house?

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