What are the costs involved in selling your home?
There are various reasons why we choose to sell a house but often the realities of logistics and costs can get lost in the planning.
There are certain costs involved in selling a house – some obvious, some not so much.
Knowing what they are in advance can help you to navigate a stress-free sale and keep you on track to achieving your future financial goals.
It’s a good idea to jot down a rough tally of anticipated costs, so that when your property sells, you can be realistic about how much cash you will be left with after everybody from the bank, to the tax man, to the real estate agent has taken their fees.
The obvious costs
Unless you are selling your own home yourself, the most obvious costs will be removalists, agent’s fees and marketing costs.
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Agent’s fees are not regulated in Australia so they can vary from place to place and agency to agency. However most tend to adhere to a similar figure, which is 2 to 3% of the sale price. Sometimes this fee will include marketing costs, other times they will be billed as extra charges. It’s well worth investing money in a highly skilled professional to handle the sale of your house, as they will more than likely be able to get a much better price than you could have and, due to their expertise and brand leverage, will attract a better quality of buyer to your property too.
Money spent on focused, good quality marketing cannot be underestimated either. With so much competition on the market, it’s important that your property is aligned with the tone set online – with gorgeous imagery, great copy and reinforced placement across multiple channels.
A unique selling point that is maximised in the marketing materials is also useful, to draw attention of buyers away from other properties and onto yours.
The devil (and the dollars) are in the detail
First prize winner for most boring cost ever is stamp duty. You won’t have to pay it as the vendor but if you are selling and planning to buy again, you will need to factor it into your costs as the buyer, for your next property purchase. As well as stashing cash away for stamp duty, there are a number of important details related to your property sale that need to be taken care of, that in most cases will require a licenced professional and therefore cost you money.
A solicitor or conveyancer will be required to manage the settlement process (unless the agent can do it), taking care of the essential legal and last-minute details.
You may also decide to sell with completed building and pest inspections, so should add the fees for those to your checklist. These small details can end up being among the most costly so don’t overlook them in your budget.
Spend some cash on upgrades to maximise impact and value
At some point after (or before) making the decision to sell, it’s a good idea to get an appraisal of your property, for a rough idea of what its current market value might be.
An appraisal also provides you with valuable information, from a real estate professional, about what attention or upgrades your property might need. The appraisal itself will be free, but the information you get from it will certainly point you in a direction where money will need to be spent.
The agent will of course tell you to clean things up if you haven’t already – from walls and floors, windows and tiles, to junk rooms and garden sheds.
This you can all do yourself, at little to no cost.
Once the general cleaning is taken care of, you will need to start spending some money.
Get some professionals in to clean carpets and window furnishings, tidy and freshen up landscaping, clear gutters, clean windows and pressure clean outdoor surfaces such as decks or driveways.
There will always be a layer of dirt you can’t see and in some cases smell, so a professional treatment will provide a deeper clean that you can yourself, which will also make everything smell fresher and more vibrant too.
With almost two thirds of Australian homeowners undertaking renovations on their property these days, it will be very surprising if the agent doing your appraisal doesn’t discuss renovating as an option with you.
It could be anything from replacing bench-tops, to putting in a whole new kitchen, or creating an entirely new kitchen/dining/living space.
Whatever it is, it’s important to consider the estimated value the renovation will add to your property, against the costs involved.
If a $5,000 renovation brings you in an extra $15 – $20,000 then it’s probably worth putting on your To Do list.
If it’s likely you’ll spend $10,000 to get a sale price in the ball park of the appraisal figure, save your time, energy and cash and focus on the stuff that will generate results.
Smoke and mirrors cost money
One of the key ingredients in selling a house is smoke and mirrors. You know the concept – where everything is kind of plain and ho hum, then with just a strategically placed mirror, some fresh flowers and a puff of smoke it turns into a magical fairy-tale?
Or something like that. Once the house is cleaned, renovated and sparkling, there will be a whole bunch of new costs you might not have thought about.
Many sellers are now enlisting the services of a professional home stager to turn their home into something that looks like it’s from an interior design magazine.
Home stagers will not only make the basic template of your home look great, they will also organise rental furniture, decorations, pictures and fresh flowers for the professional photo shoot, the open houses and the auction.
You will need to pay a premium cost for this service plus the photographer, the florist, the furniture rental people and anyone else they recruit for the campaign.
It can be stressful to think of the outlay but it can also be the difference between a home that sells and one that does not, or tens of thousands of extra dollars on your sale price.
Agents usually have some contacts they can recommend to you and it’s ok to get a few quotes before you lock in those wonderful but costly house transforming magicians.
The cost of relocation
Another set of costs many vendors overlook are related to their own personal situation while the house is being sold, during settlement and when moving day arrives.
There are incidental costs like babysitters, to take care of the kids while you’re doing ‘house jobs’ or meeting with agents, or eating out during an open house because you can’t be at home.
There may be additional accommodation costs if settlement dates don’t match and once you move you will need removalists, potentially new furniture to fit into the new space you are moving into or maybe even a storage facility to store your possessions, while you wait for your next home to become available.
Many of these things pop up day by day as the process of selling your house unfolds, but they all add up, so budgeting for incidentals like these will mean you can manage your finances throughout the transition and breathe easy knowing you have everything covered.
The most important thing to keep track of is that the money you are outlaying on everything from a new master bedroom extension, to pizzas in the empty house on moving day is not only covered, but not leeching into your profits from the sale of your home.
If you would like further advice or are considering buying or renting a property on the Mornington Peninsula, and want to know what has recently sold so you can get an idea of where the market is, you can download our FREE report HERE.
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