According to ConsumerAffairs.com, the average length of home ownership in the United States is 11.9 years as of 2024. When asked what would prompt them to move, over four in ten Americans cited wanting to own (versus rent) or owning a new or bigger house. For others, family and employment are the top catalysts for moving.
But what if you can’t wait nearly twelve years before moving? Is there a specific timeline for how long to live in a house before selling?
In this guide, the experts here at First Choice Home Buyers will answer all those questions. So read on, as we’ll also share house-selling tips and real estate advice to help you navigate Pensylvannia’s home-buying and selling market.
How Long to Live In a House Before Selling?
First, know that no law requires homeowners to live in a house for a specific period before they can legally sell it. You can even sell soon after closing or if you’ve inherited a paid-off home.
The general guideline, however, is to stay at least two to five years in a home before selling. There are several reasons for this, including the following.
Avoiding Long-Term Capital Gains Tax
Real estate capital gains tax is a form of federal tax levied on a seller’s profit from the sale of their primary residence. However, you can avoid or reduce the capital gains tax you’ll owe if you’ve lived in the property for at least two years and it has been your primary home for two out of five years immediately following its purchase.
The Internal Revenue Service (IRS) explains that qualified sellers can apply for an exclusion on the first $250,000 of their sales profit (for single tax filers). As for married and joint filers, the exclusion applies to the first $500,000.
Bigger Home Equity
Home equity is the monetary value of your home that you own outright. You can calculate this by:
- Determining how much you still owe your mortgage lender
- Establishing the current value of your home
- Subtracting the amount you still owe from your home’s value
For instance, suppose the value of your home in York, PA, is $300,000. Let’s also say that you still owe your mortgage lender $200,000. In this case, your home equity is $100,000 ($300,000 minus $200,000).
Home Equity and Length of Time in Home: The Connection
Each monthly mortgage payment you make boosts your equity. After all, part of your payments goes toward paying off the capital, not only interest. So, the longer you stay in your home, the more of your loan you pay, and the bigger your equity.
Likewise, any valuable home improvement you make can help maximize home sale value. There’s also positive real estate appreciation, which, according to EyeOnHousing.org, all 50 states and the District of Columbia experienced, with rates ranging from 1.5% to 10.4% between 2Q23 and 2Q24. If you specifically check for Pennsylvania, you’ll see the state’s housing appreciation rate was 7.1%.
Why Equity Matters Before Selling
Ideally, you’d want to build as much equity as possible before moving out and handing the house to a new owner. Remember, you must still pay off your outstanding mortgage balance when closing the deal. So, the more equity you have, the more money you can keep when you sell your house and pay off your mortgage.
Your Mortgage Loan’s Pre-Payment Penalty Policy
Some mortgage lenders charge a pre-payment penalty for paying off the loan sooner than its maturity date. You may have to pay this if you sell your home within three years of signing your mortgage documents.
According to the legal website NOLO, the Consumer Financial Protection Bureau (CFPB) only allows pre-payment penalties of up to 2% of the outstanding loan balance for the first two years of the loan. In the third year, the penalty decreases to 1%. Moreover, only certain mortgages, such as fixed-rate loans, can impose such fees.
Costs Associated With Selling a House
Another reason for the recommended home selling timeline of two to five years is so that you can better prepare for the following costs:
- Real estate commission
- Title insurance
- Recording and settlement fees
- Prorated property taxes
- Escrow and wire transfers
- Legal fees (if you hired a real estate lawyer)
- Moving costs (to have all your stuff moved from your old home to the new one)
Depending on the state of your home now, you may also need to spend money on house repairs before selling. Likewise, a home inspection, which gives you time to find and address problems (e.g., roof or plumbing leaks), can add to your sales expenses. Another optional cost is home staging, which involves hiring professionals to redecorate and clean the property to present it to buyers in the best light possible.
All those items can add up to thousands of dollars, so dealing with them so soon after you bought the house a year (or so) ago can be difficult on your finances.
What if You Need to Move ASAP?
Significant life changes may be enough to compel you to sell your home soon after acquiring it, such as a divorce or a job relocation. In this case, you may be unable to wait two years (much less five) to move and start a new life.
Regardless of your reasons, you have several options to help reduce the blow to your finances.
Complete Only Necessary Home Repairs or Maintenance
Necessary home repairs or maintenance are items that, if left unaddressed, could affect the safety and habitability of your home. For the same reason, they could significantly decrease your home’s sale price, so you should prioritize them over costlier renovations or remodeling.
Here are some examples of repairs and upkeep to consider before selling.
Plumbing Leaks
Plumbing leaks can result in considerable water damage and make your home an ideal place for mold. Mold can cause health woes and more property damage, so ensure you look into getting plumbing leaks fixed by a local licensed plumber.
Roof Leaks
Like plumbing leaks, roof leaks can cause water damage and encourage mold growth. Have a licensed roofer inspect your roof and fix leaks before they cause more problems when the next rain or storm hits.
Clogged or Deteriorated Gutters
Unkempt gutters can attract all sorts of creepy crawlers and pesky pests (think mosquitoes, roaches, ants, rodents, and sometimes, even snakes). If they’re in disrepair, they can also cause water and mold damage to your home.
Have a roofer or gutter specialist clean and repair your gutters before marketing your home. Well-maintained gutters, often visible from the street, can also help improve curb appeal.
Electrical Problems
Defective electrical systems can result in dangerous (even deadly) electrocutions, burn injuries, and fires. They’re more common in older houses, but even if your home is relatively new, you should at least consider getting an electrician to perform an inspection. They can tell you whether your electrical system is up-to-code or if there’s a significant issue you need to address before selling your home.
Deep Cleaning
No one wants to live in a dirty, messy house, so if your home is full of dust and disarray when you show it to potential buyers, expect them to feel put off. All the clutter can prevent them from imagining themselves happy living in your home.
So, set aside enough time to deep-clean your home or hire professional cleaners to do it for you.
Consider Renting Out the Home
An alternative to selling your home is renting it out to tenants and then using their rental payments to pay your mortgage dues. If you need to move out but want to keep the home, your income as a landlord may be enough to cover your home loan repayments. However, opting for this route requires understanding and complying with the Pennsylvania Landlord and Tenant Act.
Your other option is to hire a professional property management company to oversee your rental. They can take over most of your landlords’ chores, such as marketing, tenant placement, rent collection, and property upkeep. However, you’d have to pay them a portion of your monthly rental income, which could be around 10% (for example, $100 on a monthly rental fee of $1,000).
Rent Your Next Home in the Meantime
If you don’t have the necessary funds to buy a new home immediately, consider renting your next place until you’ve saved up enough. If you’re staying in Pennsylvania, you’ll be happy to know that the state’s rental rates rank somewhere in the middle; it’s not cheap, but neither is it overly expensive. Per RentData.org, its average 2-bedroom apartment fair market rent price is only $1,076.
Sell to a Cash Home Buyer
If you must sell your home as soon as possible and want the simplest way to complete the job, consider working with a cash home buyer. Cash home buyers are real estate investors who make cash offers and purchase homes as-is.
Here are the top benefits you can expect when you work with a reputable cash home-buying company like First Choice Home Buyers in Pennsylvania.
No Repairs or Renovations Necessary
If you sell your home as-is, you’ll sell it in its current state.
So, if your house is in fantastic condition, great; you’ll likely earn a profit from the sale. If not, don’t worry; you don’t have to spend money on repairs or improvements. First Choice Home Buyers will still make a fair offer regardless of the state of the house.
Get a Fair Cash Offer
Real estate investors have readily available funds, so they can afford to make a cash offer on your house in Pennsylvania, be it in Harrisburg, York, or Mechanicsburg. They don’t rely on financing, which helps minimize the risk of the sale falling through.
By contrast, the exact opposite can happen if you sell your home to a buyer who must finance the home purchase. The sale may fall through if their mortgage application gets denied.
Pay No Commission or Fees
Home buyers and sellers often work with real estate agents who charge a commission. For example, let’s say you hire an agent with a 5% commission rate to help sell your home. If they can sell it for $300,000, you’ll have to pay them $15,000.
Now, even if you don’t have to pay capital gains taxes, you’d still have to spend money on other costs, such as title insurance, the down payment on your next home, and moving services. So, $15,000 for commission alone is a lot to shell out.
Partner with First Choice Home Buyers in Pennsylvania to avoid hefty agent commissions. We don’t charge such fees since we’re not intermediaries but the actual buyer.
Get Things Done and Over With Quickly
When you partner with our cash home-buying company, we can begin the process immediately and close the deal within a few days. The process is pretty straightforward, involving minimal work on your part:
- Call us by phone (717-744-9113) or fill out our online contact form
- Answer a few questions about your property and situation
- Get a phone valuation or schedule an in-person property assessment and receive your cash offer
- Agree to the fair cash offer and have three more days to review and finalize your decision
- If you accept the terms of the contract, sign, complete, and return the paperwork
After the last step, you’ll receive the funds as payment for your home.
So, working with a reputable cash home buyer like First Choice Home Buyers is one of the fastest, most straightforward ways to sell your home fast in Pennsylvania. By partnering with us, you can get your funds quickly and move on with your life sooner.
Ready to Sell Your Home?
Now you know the answer to the question “How long to live in a house before selling?” is generally two to five years. The wait time is primarily for reducing capital gains tax, building more home equity, and avoiding mortgage pre-payment penalties. However, if you must sell soon after buying, you can legally do so.
If you need to sell a house quickly in Pennsylvania, First Choice Home Buyers can help. With our 20 years of real estate experience in the local area, we can close in as little as 48 hours and pay 15% more on average than the competition.
Reach out to us today to get your non-obligatory cash offer!
