I Sold My Home for 8% More Than I Paid for It. Here's Why I Didn't End up Making Much of a Profit

Not too long ago, I sold my house. The property sold quickly, and I was offered a price of 8% more than I had paid for it. I owned my home only for a short time -- about 18 months -- prior to finding a buyer but I had to sell because the traffic in the area turned out to be terrible. The house also ended up being too small for our family.

Although making an 8% profit may seem attractive, the reality is, I walked away with very little money and I was lucky I didn't lose any. Here's why.

There are a lot of costs associated with a home sale

Homes are expensive, so an offer of 8% more than I had paid for mine meant I was offered tens of thousands of dollars more than I spent on it. But in the end, I walked away with just under a 1% profit, making only a few thousand dollars that I could put in my bank account.

The reason for this is simple: The rest of the "extra" money above what I had paid for the home ended up going to cover the costs of the transaction. Specifically:

• I had to pay a 3% commission to the buyer's agent. I was lucky enough to be able to sell my home myself without a seller's agent, or I would have had to pay another 3% commission to my own agent and would have ended up losing money on the sale.
• I had to pay for title insurance. Title insurance is insurance that protects a buyer in case there are defects in the title (which establishes proof of ownership). In my state, it's customary for sellers to pay for this, and it costs several thousand dollars.
• I had to pay for a flat-fee MLS service. Because I listed the house myself, I had to pay a real estate professional to put my home listing into the database most commonly used by buyers to find properties.
• I had to pay transfer taxes and fees. These fees went to the local government for things like recording the deed and paying transfer taxes.

By the time I had incurred all of these expenses, my profits were all but wiped away. I was lucky I did not have a mortgage that I had to pay back since I hadn't borrowed for this home. And I was fortunate to have the knowledge, time, and ability to sell my house without having to pay additional fees for an agent. That would have meant walking away with less money than I'd paid.

Even a big gain doesn't necessarily mean you'll walk away with a ton of money

An 8% gain in value in 18 months is a reasonably decent return for a real estate investment. But even with a generous offer for my home, I nearly lost money.

This goes to show you why it's typically important not to buy a house with a short timeline since you may not have time to earn enough of a profit to walk away with a reasonable amount of gains after accounting for costs. While things turned out OK for me, this isn't the norm, and even a big "profit" on paper is no guarantee you'll walk away with more than you spent.

If you won't be in a house for at least two to five years, you should be prepared for the idea that you may not break even when you go to sell the house down the line.