There maybe many reasons why you would want to sell your house. Whether it’s to upgrade to a bigger house, cash in on your retirement or pursue other investment opportunities. It’s easy to get excited about the uptrend in the market and the price that you may be offered.
You should take into consideration the following additional costs which are associated with selling your house
- Real estate agent commissions;
- Legal and conveyancing costs;
- State Revenue Office (SRO) stamp duty;
- Titles office lodgment fees;
- Mortgage, lender or bank fees;
- Any additional hidden costs.
Real estate agent commissions
The first most obvious cost is the selling agent’s commission. It is also the bulk of the cost that you will incur.
It may feel enticing to eliminate the agent altogether and sell the property yourself. After all, there are so many websites that let you advertise your property for free. Gumtree and Facebook are the most lucrative options.
However, if you are looking to cash in on the latest market trend or you want to obtain the best price for your property, a seasoned real estate agent might just make it happen for you. They can not only help find a good bargain through have a wider reach of audience but may also increase the probability significantly of finding a buyer who would be willing to pay a higher price. They will also ensure that all things run smoothly.
Most agents in Victoria charge a fixed fee or percentage commission on the final sale price achieved. The important thing to note here is that if you opt for the fixed fee option, you may be liable the fixed fee amount even if the property does not sell or you decide to withdraw the house from the market.
Also regardless of what you end up selling your house for, the fixed fee amount initially agreed to will be due and payable irrespective of the property sale price.
In choosing the percentage commission fee structure, the fees will be due and payable only after a successful sale of the property and there is usually an incentive for the selling agent to push for the highest price to increase their commission.
The percentage commission can be negotiated and agreed to with the agent upfront, prior to listing on the market. A general overview of the fees charged is as follows.
|State||Average real estate agent commission*||Conveyancing||Marketing||Auction Fees|
|VIC||2.05%||$800 – $2,000||$1,000– $10,000||$400 – $1,000|
*Source = localagentfinder.com.au, May 2018
There is also the option of paying a bonus fee to the selling agent if they exceed a target sale price. For example if you expect to sell your house for $700,000 but end up selling for $800,000, you may pay the agreed percentage commission on $700,000 and an extra agreed bonus on everything above this base price.
There might be some additional cost that your agent might ask you to pay apart from commissions. These are advertising costs for your house and including arranging a professional photographer, online listing fees on sites such as www.domain.com and www.realestate.com.au, placing a signage board outside your house and also the auctioneer’s cost in case you opt to sale at auction.
Legal and conveyancing fees
You will require a solicitor or conveyancer to prepare all the legal documents to transfer the property from you to the buyer. The Solicitor or conveyancer will need to liaise with the selling agent, your lender and all interested parties for a smooth transfer to occur. The approximate fees to engage a solicitor or conveyancer vary and may range from $800 to $2,000.
In Victoria, prospective sellers must prepare a Section 32 Vendor’s Statement. This statement includes essential information about the property being sold that may not be apparent upon inspection, including:
- A copy of the property title an plan of the specific lot;
- Details of utilities connected and supplied to the lot;
- Current council rates notice;
- Current water authority statement;
- Details of any applicable owners corporations;
- Building permits issued with the last seven (7) years;
- Planning permit and the property zoning;
If the Section 32 Vendor’s Statement is not prepared correctly the buyer may rescind the contract on the basis of defective disclosure and sue for damages. Therefore, it is advisable to appoint a qualified solicitor or conveyancer to draft all necessary legal documents.
State Revenue Office (SRO) stamp duty
Stamp duty is payable to the State Revenue Office (SRO) by the buyer. However, if you are selling in order to purchase another property there may be stamp duty due payable to the SRO.
Mortgage, lender and bank fees
A mortgage is a loan that the property owner borrows from the bank to purchaser their house. A majority of property purchasers don’t have all the funds to proceed with the purchase and borrow money from the bank. There are numerous types with loan terms varying from 5 to 30 years. The repayments on such loans may be a fixed or variable interest rate. In instances where funds are borrowed the bank will hold onto the Certificate of Title until either the mortgage is paid in full or you sell the house. Your bank will charge a fee to release the Certificate of Title to you or to the Purchaser and also to attend the sale settlement.
Other hidden costs
There maybe additional hidden costs that you should be aware of. These include:
Fixing and repairs- Before preparing your property for sale you may want to take the time to do some repairs. There may include replacing the carpet, refinishing hardwood floors, repainting the interior walls, removing overgrown weed and cleaning around and inside the property. Minor cosmetic repairs will attract more buyers and also assist the the marketing of the property.
Items that are visibly unappealing and in need of maintenance should be attended to. This will give any potential buyer the confidence that the house has been well maintained and does not require any additional works.
Cleaning – It’s important to have a clean and pleasant house. First impressions do matter.
Small renovations in bathrooms and kitchens can go a long way.
Home staging – is another option gaining popularity in Australia. You might or might not hire a professional to do it. But watching some YouTube videos or researching on DIY options will add value in thousands to the price of your property. Home staging is just making your house presentable and appealing to prospective buyers. It’s about showcasing to them the life they can have with their family and not just a house of bricks.
Selling a house can be a taxing affair which can be made easy with preparing and budgeting. Many real estate agents offer free property appraisal and can assist you with the process. Shop around a until you find a real estate agent and and conveyancer you are comfortable with.
Make a list of all the necessary work that you anticipate to do. Obtain quotes and talk to different professionals including tradesman and handyman to get some advice. Accordingly, you can make a much calculated and carefully thought out plan in terms of your budget as well as your timeline.
If you are looking to get the right advice and to get the most out of selling your property feel free to contact our highly qualified team on (03) 8590 8370.
written by Samia Mansour