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“Normally, someone [who’s] underwater is not going to sell. But if they’re in a spot where they don’t have a choice, if they can afford to pay the difference and sell the property, some people will do that,” Helali shares.
“For most folks, that’s not an option,” he adds. “At that point, they’ll need to contact the lender to request a short sale, which is when you sell for less than what you owe.”
The lender must agree to the short sale and approve an offer before you can move forward with the transaction. Depending on the situation, it may be possible to work out an arrangement or modified payment plan.
Another option is selling to a cash buyer. This route is usually faster, simpler, and doesn’t require tons of repairs or appraisals. Cash sales can take a lot of the stress out of selling and help you move on from a home that’s weighing you down. With fewer hoops to jump through, you can often avoid the delays that come with a traditional sale.
HomeLight’s Simple Sale makes it even easier by connecting you with trusted cash buyers and helping you sell within 7 days. See how much you could get by trying the Home Cash Offer Comparison Calculator below.
Who is responsible for the mortgage during the sale?
A borrower is required to make on-time mortgage payments until the outstanding balance is paid in full. So as you prepare and price the home for sale, navigate offers and negotiations, and wrap the steps to closing, you’ll continue to make mortgage payments in the same way you always have.
“Keep making your mortgage payments until the day of closing,” Bartlett says. “You don’t want to get caught up in the selling process and become late on your mortgage because that will really hurt you when it comes time to buy another house.”
How soon can you sell a house you just bought?
Technically, you can sell a house as soon as you buy it, but experts often recommend waiting around five years. This “five-year rule” helps homeowners maximize equity, take advantage of tax benefits, like the capital gains tax exclusion, and ride out short-term market fluctuations to sell at a better price.
That said, there are situations where selling sooner becomes necessary. Unexpected life changes, such as a job relocation, a family death, a divorce, or a serious medical issue, can all make a quick sale unavoidable.
But just remember, real estate isn’t a get-rich-quick scheme. Although some markets might see quicker appreciation, in most cases, the value rises slowly over time, making it advantageous to hold on to the home for a while before selling, if possible.
Can you sell a home before it’s paid off?
The short answer is yes. The timing of when to sell a home is a personal decision and is dependent on your circumstances and financial goals.
However, keep in mind that if the value of your home won’t cover your outstanding mortgage balance and selling expenses, you’ll need to bring separate funds to the sale to cover the difference.
“It comes down to how much equity you have in your home,” Bartlett says.“It all depends on the seller’s individual situation.”
That said, Bartlett notes that in his experience, waiting at least a couple of years tends to be important for at least breaking even on your home sale.
“Because of closing costs and agent fees, it’s expensive to sell your house,” Bartlett explains. To ensure you’re coming out ahead, it can, as a general rule, be beneficial to let your home appreciate for at least a couple of years before you sell.
Another thing to keep in mind is that if you sell the home before owning it for a minimum of two years, you’ll likely have to pay capital gains tax as a result of the sale.
