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Starter homes are often small, affordable homes that are a stepping stone to something more permanent. But in today’s competitive housing landscape, moving up from that first property can be surprisingly difficult, even if you’ve built up equity.
Between commissions, closing costs, and more selling fees, many people walk away with far less than expected.
So, if you’re planning to sell your starter home and buy your next one in the same market, you’ll need more than just a good listing price—you’ll need a smart financial strategy.
What it really costs to sell your home in 2025
It’s easy to focus on your home’s list price and assume that money goes straight into your next down payment. But the reality of selling a home, especially in today’s tight and competitive market, is that a sizable chunk of that sale price goes toward selling costs before you ever see a check.
The biggest cost for most sellers is the real estate commission, which is typically around 5% to 6% of the sale price. (The exact amount and percentage depend on your area, though.)
Sellers are also obligated to pay closing costs, which might include title fees, escrow charges, and transfer taxes (depending on your state or municipality). In total, these can run 3% to 6% of the sale price.
Also, while not mandatory, many sellers spend money prepping the home—staging, deep cleaning, landscaping, professional photography, or small repairs to help the home show better and sell faster. These costs can vary widely but commonly total $1,000 to $3,000.
Even when inventory is tight, buyers might still ask for concessions, as a counter to anything that comes during the home inspection. These concessions can run the gamut from covering part of the buyer’s closing costs, agreeing to pay for repairs, or offering credits. You can expect to pay $2,000 to $5,000 or more, depending on negotiations.
Example
Let’s say you’re selling your home for $450,000. Here’s a rough estimate of how the costs might break down:
- Agent commission (5.5%): $24,750
- Closing costs and transfer taxes (4%): $18,000
- Prep and marketing: $2,000
- Buyer concessions: $4,000
- Total selling costs: $48,750
You can expect your net proceeds to be $401,250. That’s nearly $50,000 (or about 11% of your home’s value) gone before you’ve even put in an offer on your next home.
And here’s how much you’ll need to buy your next one
Selling your home is only half the equation—buying your next one comes with its own set of steep upfront costs. Even if you walk away from your sale with a chunk of change, that money can disappear quickly once you start writing checks for the next place.
Conventional loans require a minimum down payment of 3% to 5%, but many buyers aim for 20% to avoid private mortgage insurance (PMI), which can add hundreds to your monthly mortgage bill.
Buyers usually cover 2% to 5% of the purchase price in closing costs. That includes lender fees, appraisal, title insurance, and escrow charges.
Other upfront costs of homebuying include home inspections, moving expenses, and immediate repairs. If the purchase and sale don’t line up perfectly, then you’ll also need to think of temporary housing and factor any of their costs.
Example
Say you’re buying a $400,000 home. Here’s a breakdown of what you might need to pay upfront:
- Down payment (5%): $20,000
- Closing costs (3%): $12,000
- Other costs: $5,000
- Total upfront buying costs: $37,000
With a 7% interest rate, you can expect a $2,525 monthly payment, but that doesn’t include PMI. If you put 20% down—or $80,000—the total cost of buying comes out to $97,000. The monthly payment would be lower, though, at $2,125 and would not include PMI.
How to make sure you have enough to buy while selling
To successfully move from your starter home to your next one, it’s crucial to think beyond just selling—make sure you’re financially prepared to buy, too.
Keep enough cash liquid for a down payment
Before your current home sale closes, make sure you have access to enough liquid funds for a down payment on your next property. Even if you’re counting on proceeds from your sale, those funds might not be available exactly when you need them. Avoid locking all your equity in until the sale is finalized.
Explore a bridge loan or HELOC
If you’re buying before selling or your transactions are close together, short-term financing can help fill the gap.
A bridge loan offers temporary funding using your current home’s equity, while a home equity line of credit (HELOC) allows you to borrow against your home’s value in advance. Both can give you the flexibility to move quickly on a new home, without waiting for your sale to close.
Weigh offering less upfront to preserve cash
In some cases, it might make sense to negotiate a smaller earnest money deposit or reduce the amount of cash you commit early in the transaction. This can free up funds for your next purchase, but be sure to balance this approach with a strong overall offer that’s still competitive in the market.
Have a backup plan for housing
In today’s market, the ideal scenario—selling your home and closing on a new one the same day—is increasingly rare. So you’ll need to consider short-term options, whether it’s a rental, staying with family or friends, or negotiating a rent-back agreement with your buyer. Having a realistic interim plan helps avoid last-minute stress and rushed decisions.
Flexibility, both in planning and in budget, is your best asset. Build in a financial cushion and a few contingencies, and you’ll be better prepared for whatever the market throws your way.