How Much Equity Should I Have in My Home Before Selling?
- Ron Melvin
- Mar 14
- 4 min read
Updated: Mar 18
Selling a home is a significant financial decision, and one of the most important factors to consider is your home equity—the portion of your home that you truly own, free from debt. Equity plays a crucial role in determining whether selling your home will be a profitable move or if you’ll face financial challenges.
At a minimum, you should have enough equity to cover all the costs associated with selling and transitioning to your next home. But how much is enough? Let’s break it down step by step.
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Home equity is the difference between your home’s current market value and the amount you still owe on your mortgage or any other home-related loans. It represents your financial stake in the property and determines how much money you will walk away with after a sale.
For example, if your home is worth $600,000 and you owe $400,000 on your mortgage, you have $200,000 in equity. However, not all of this equity will be available to you after selling—various costs must be accounted for.
Minimum Equity Needed to Sell Your Home
Before putting your home on the market, you should ensure that you have enough equity to cover the following expenses:
The primary obligation when selling your home is to pay off any remaining balance on your mortgage. If you have additional loans tied to your property, such as home equity loans or lines of credit, those must also be repaid.
For example, if you owe:
$400,000 on your mortgage
$30,000 on a home equity line of credit (HELOC)
You need at least $430,000 in equity just to break even before considering any selling costs.
Realtor commissions are one of the largest selling expenses. In most cases, sellers pay both the buyer’s and seller’s agent commissions, which typically total 5% to 6% of the home’s sale price.
For a $600,000 home, this means:
5% commission = $30,000
6% commission = $36,000
Ensure your equity can absorb this cost.
Most homes require at least minor repairs and cosmetic touch-ups before hitting the market. In some cases, sellers need to complete larger projects to attract buyers and maximize their selling price.
Common pre-sale improvements include:
Painting – $1,000 to $4,000
Landscaping updates – $500 to $5,000
Minor kitchen or bathroom upgrades – $2,000 to $10,000
Flooring repairs – $1,500 to $7,000
Depending on your home’s condition, set aside at least $5,000 to $20,000 for preparation costs.
Certain cities or homeowners associations (HOAs) require sellers to complete repairs or inspections before closing a sale. These may include:
City-mandated inspections (structural, sewer, water, or fire safety)
HOA clearance fees
Pest or termite inspections
These expenses can range from a few hundred to several thousand dollars, so research local requirements ahead of time.
Beyond the realtor commission, you’ll also need to account for:
Escrow and title fees – $2,000 to $5,000
Transfer taxes – Varies by location, but often 0.5% to 2% of the sale price
Prorated property taxes
For a $600,000 home, expect at least $5,000 to $10,000 in closing costs beyond commissions.
To sell quickly and for top dollar, you’ll likely invest in professional marketing and staging.
Staging costs – $2,000 to $5,000
Professional photography and videography – $300 to $1,000
Online advertising (social media, premium listing sites, etc.) – $500 to $2,000
While optional, these efforts significantly impact a home’s marketability and selling price.
7. Moving Expenses
Once your home sells, you need funds for moving. Costs vary depending on distance and services required:
Local move (same city) – $1,000 to $3,000
Long-distance move – $5,000 to $10,000+
Temporary storage (if needed) – $200 to $500 per month
Factor in moving expenses when determining your required equity.
8. Funds to Secure Your Next Home
If you’re buying another property after selling, you’ll need funds for:
A new down payment (typically 5% to 20% of the next home’s price)
Closing costs for the new purchase
Rental costs if there’s a gap between selling and buying
If your next home costs $700,000, a 10% down payment would require $70,000.
How Much Equity Should You Aim For?
To summarize, you should have enough equity to cover the following:
Expense | Estimated Cost (Based on $600,000 Home) |
Mortgage & Loan Payoff | $430,000 (example) |
Realtor Commission | $30,000 to $36,000 |
Home Repairs & Prep | $5,000 to $20,000 |
Required Inspections | $500 to $3,000 |
Closing Costs | $5,000 to $10,000 |
Staging & Marketing | $2,500 to $7,000 |
Moving Expenses | $1,000 to $10,000 |
Funds for Next Home | $50,000 to $100,000+ |
TOTAL NEEDED | $524,000 to $616,000+ |
If your home is worth $600,000, you should aim to have at least $150,000 in equity to cover all selling costs and move forward comfortably.
While most sellers prefer to wait until they have sufficient equity, some situations may justify selling sooner:
Relocation for a job or family reasons
Financial hardship (avoiding foreclosure, divorce, or job loss)
Market conditions suggest future home prices may decline
In such cases, you may need to explore alternative selling strategies like short sales or leasebacks if you lack equity.
Final Thoughts
Having at least 20% to 30% equity before selling is ideal, but the exact amount depends on your mortgage balance, selling costs, and future housing plans. Before listing your home, calculate your net proceeds carefully and work with a real estate professional to ensure you walk away with enough funds to move forward confidently.
Thinking about selling? Reach out today for a home equity evaluation and personalized selling strategy!
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