The unexpected costs of selling your home
Byline author: Kate Browne
Publication: Vanquish Finance Group
You’ve put your house on the market for a reasonable price and you’ve got your eye on another property. You shouldn’t have to fork out too much from here, right? All you’ll need to buy are a few dozen cardboard boxes for the move and a case of beer for your friend in exchange for borrowing their Ute.
The costs you (probably) can’t avoid
In a perfect world, this would almost certainly be the case. Until that happens, you’re going to be facing a handful of selling costs you may – or may not – have expected.
Real Estate Commission
You and your agent might get along like a house on fire, but this doesn’t mean they work for free. Real estate agents generally require a 2% commission of your final selling price. While this may not sound like a lot, it can take you by surprise if you haven’t done the math.
Let’s say you sold your property for $600,000. A commission of 2% would be $12,000, leaving you with $588,000 in the bank after the sale. You do have the option to sell your property independently, but it can be a time-consuming and difficult process.
These can vary based on your agent, location, the overall value of your property and the marketing channels used. You’ll usually pay for advertising as a separate amount on top of the real estate commission.
The funds are used to cover marketing material such as signage, internet and newspaper advertising, auction marketing and brochure printing. You should generally budget for around 1% of your asking price. For instance, if you’re selling a property worth $500,000 you should expect to pay around $5000 for advertising.
A conveyancer handles all of your legal paperwork during the sale. This includes preparing the title deed and settlement documents, and making sure you’re meeting all your legal obligations. Their services will set you back around $750 – $1,000 but keep in mind if you are tempted to save money by doing it yourself, that this sort of work is usually best left to the professionals.
When you buy a house, the government will slap you with a stamp duty tax. Congratulations! However, you don’t need to pay it if you’re selling a home – only if you’re buying one. Stamp duty fees can often run into the tens of thousands, and can vary from state to state. Make sure to do you research and crunch the numbers with a stamp duty calculator to avoid being caught out.
The extra, unexpected costs
Mortgage discharge fees
Some lenders will actually hit you with a farewell fee for taking your loan elsewhere or paying it out early as part of the sale. This is known as a mortgage discharge. The fee generally ranges from $150 to $450. As far as parting gifts go, it’s not the sweetest.
If you have a whole lot of stuff and need to cart it half-way across the country, removalist costs can tack on an extra $1,000-$3,500 to your bill. But as anyone who has ever had to pack up a house knows, removalists truly are worth their weight in gold. Life is short – pay someone to carry your piano.
If you decide to go to auction, that loud person with the hammer will need to be paid. But just how much will this cost you? It depends. Sometimes auctioneers will be paid out of the agent commission if they’re working together, or the fee can come from your own pocket. This can cost from $200 to as much as $1,000 at the top end of the scale.
While it might feel disheartening to have to add yet more costs to your list when selling, but if it’s any consolation, there’s a good reason they’re on there. Conveyancers, auctioneers and removalists will take some of the hard work out of selling a home for you – be it through paperwork or lifting whitegoods. And as with any service, it’s always worth getting three different quotes so you have a solid idea of what the market is charging. Always ask if it’s the best price they can do as well – remember, they want your business!
You can always choose to go it alone, but this can be a stressful and difficult process. Moving house is nothing short of enormous, and anyone who’s done so knows that some things are worth forking out for.
If you are thinking of selling and buying a new home and would like a thorough analysis of your financial situation then call Declan Hanratty, Managing Director of Vanquish Finance Group. Call 0409 089 456 or shoot him an email.