What nobody tells you about selling your starter home

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Published Date 8/1/2025

A grim reality for those trying to “move up?” You can expect about 11% of your home's value gone before you've even put in an offer on your next home. This stark reality check reveals why so many homeowners find themselves trapped in their starter homes, despite having built substantial equity over the years, according to Realtor.com’s Elissa Suh.

How can this happen? The dream of moving up from a starter home can quickly become a financial nightmare when sellers discover how much of their equity evaporates in the transaction process. “Real estate commissions alone typically consume 5% to 6% of the sale price, while closing costs, transfer taxes, and title fees can add another 3% to 6%,” she says. “Factor in staging, photography, repairs, and buyer concessions, and sellers often lose 11% or more of their home's value before they ever see a check.”

She offers the example of a $450,000 home sale where the seller pays $24,750 in agent commissions, $18,000 in closing costs and taxes, $2,000 for staging and marketing, and $4,000 in buyer concessions. The net proceeds drop to $401,250, creating an immediate $48,750 shortfall that many homeowners may never have anticipated.

Still ready to buy? Figure a $400,000 home purchase requires $20,000 down (let’s say at 5%), plus $12,000 in closing costs and $5,000 in miscellaneous expenses, totaling $37,000 upfront. If you’re aiming for a 20% down payment to avoid private mortgage insurance, you’ll face an even steeper $97,000 total cost, though you’ll save on monthly payments and eliminate PMI.

On to timing, because time costs money. The ideal scenario of closing both transactions simultaneously has become increasingly rare, forcing sellers into bridge loans, HELOCs, or temporary housing arrangements, says Suh. “Smart sellers prepare by securing liquid funds independent of their sale proceeds, negotiating flexible terms, and building financial cushions for unexpected delays or costs.”

The key to all this? Look beyond listing prices to understand the true cost of moving up. “Those who enter transactions with realistic expectations and flexible financing options find themselves better positioned to navigate the complex dance between selling and buying,” concludes Suh.

Realtor, TBWS

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