What Is the 5-Year Rule for Selling a House? There Are Actually Two

In a seller’s market, where there are fewer homes available for sale, increased demand can drive sale prices above the list price, potentially resulting in larger profits for homeowners. This is why being knowledgeable about tax implications is more important than ever when navigating this type of market

Building on this trend, HomeLight’s 2025 Top Agent Insights: AI Edition report shows that 41% of agents believe homebuyers currently hold the most bargaining power. Still, regional responses highlight that the U.S. housing market is far from uniform, with sellers maintaining the advantage in the Midwest and Northeast.

This regional divide highlights the fact that market conditions ultimately depend on location.

Testing the 5-year rule: How much does it cost to sell my home?

If you’ve purchased a home within the past five years, you may remember the costs associated with purchasing it, from inspection fees to closing costs. These costs can add up and will also factor into whether it’s worth it to resell within five years, since most people who sell their home often need to purchase a new one to live in.

To make money on your home sale, it needs to have appreciated in value more than the sum of all the selling fees you will face when moving. Your costs will vary depending on the condition of your home and the availability of homes for sale in the market in which people are buying.

Here are some common costs associated with selling your home:

• Staging fees and costs to prep the house for showing (varies)
• Realtor commissions for the sale (3% to 6% of the home’s sale price is standard)
• Inspection and repair fees (varies)
• Closing fees to sell, which include title fees, transfer taxes, escrow fees, recording fees, and prorated property taxes (1% to 3% of the sale price)
• A possible second set of closing costs if buying a new home
• Seller concessions (2% to 6% of the sale price)
• Overlap costs (1% to 2% of the sale price)
• Moving and relocation costs (varies)
• Mortgage payoff (varies)

Beating the 5-year rule: Get experts involved

“One of the things that homeowners need to think about is what your strategy will be on how you’re going to get to the next house,” Studebaker says.

“Some people are upsizing, some people are relocating, some people are downsizing. They really need to get with a professional [to] put together a plan […] a strategy on how you’re going to make that next move.”

Consulting your CPA or tax professional is crucial when considering selling your home within five years of purchase. A tax professional familiar with your financial circumstances can provide invaluable insights into whether selling would be advantageous or lead to additional expenses.

It’s important to think about how long you want to live in a house before you make a purchase because there are many benefits to following the five-year rule. Losing money on a home purchase is never the goal, so make sure it’s the right choice before signing on the dotted line.

Partner with an experienced agent to truly evaluate the 5-year rule

If you’re thinking about selling your home, consider where you want to be five or ten years from now. Following the five-year rule can help you maximize the value of your current property and position yourself for the best return when it’s time to move on.

And when it’s time to sell your next home, use HomeLight’s Agent Match tool to find a top agent to partner with. No matter how long you have lived in your home, our data shows that the top 5% of real estate agents across the US sell homes for as much as 10% more than the average agent.

Header Image Source: (Emily Barrington/ Unsplash)