Sometimes, life doesn’t go as planned. You bought your dream Toronto house or condo and because of life circumstances, you’re being forced to sell it during the first year. Maybe you’re getting divorced (sorry). Maybe your company is transferring you to an exotic location (lucky you). Maybe you bit off more than you could chew and you can’t afford the mortgage payments plus the leaky roof and basement. In any event, selling a house or condo shortly after you bought it isn’t ideal. Here’s what you need to know:
You aren’t likely to come out ahead. By the time you factor in land transfer taxes, legal costs and real estate commissions it’s almost impossible that your house or condo will have appreciated enough during a year to break even, let alone make a profit. Anyone who says otherwise is blowing smoke–sorry.
You can’t hide the reality from buyers. Anyone working with a REALTOR will know when you bought your house and they’ll know how much you paid. They’ll also be able to determine how much prices have gone up in your neighbourhood and they’ll likely be able to see what it looked like. So if you haven’t done any renovations, don’t expect anyone to think that the condo you paid $500,000 for 8 months ago is now worth $600,000. If you really did get a “deal” for some reason (desperation sale, you swooped in and bought and underpriced property before the sellers had a chance to realize it), you’d better be able to make a convincing case. Otherwise the assumption is: you paid market value, and it’s likely only appreciated the same as the other condos in your building.
Getting greedy may cause you a lot of pain and suffering. I get it, nobody wants to lose money in real estate. But you have to remember that your goal is to sell your property. Over-listing (setting the asking price too high) will only mean that your property sits on the market longer and you may end up getting less on day 87 than you could have on day 14 had you listed at market value. Whatever circumstance got you to this place will only be made more stressful if you can’t sell your property.
It’s not your REALTOR’s fault that you’re in this situation. It’s interesting how people who need to sell shortly after buying expect their real estate agent to magically help them break even, or worse, cut their commission to make the math work out better. We didn’t get you into this mess (I hope). Telling your stock broker you need to make money on that Facebook stock unfortunately won’t do any good, and you wouldn’t ask them to take your losses out of their salary either.
You may have other options. Instead of taking a financial hit, explore the options you have to rent your property in the short term. Granted you may have to hold the property for a few years in order to break even and there’s always the risk of a market downturn in which case you’ll lose potentially even more money, but it may be an option worth exploring.
Selling a property within the first 12 months of purchasing it isn’t fun…but sometimes, life just gets in the way.