We are all pretty familiar with the costs involved when it comes to buying a home.
Selling also comes with its own costs and fees – some of which you may have factored in and some which may come as a surprise as you move through the selling process.
Budgeting for these expenses will give you a clearer picture of the total profit you can expect once the sale of your home is finalised.
Repairs and Renovations
Even before you begin the process of putting your home on the market, you should get a professional appraisal done of your property. This may highlight the need to undertake repairs or renovations in order to maximise the potential sale price. The cost of this can vary greatly, depending on the scale of the works to be done- from a few hundred to tens of thousands of dollars.
To avoid overcapitalising, engage an experienced agent who knows your area well – they will be able to give you advice on what buyers are looking for.
Agent’s Commission
In Victoria, a real estate’s commission rate varies between 1.6% and 2.5% (Melbourne) and between 2.5% and 3.5% in regional areas throughout Victoria.
Commission can be fixed or tiered – a fixed rate is a flat fee calculated as a percentage of the sale price of your property.
A tiered commission means that the rate of commission you pay is tied to the sale price -the higher the price, the more commission you pay the agent.
Advertising and Marketing Costs
A comprehensive marketing campaign for your property when it goes on the market should include online listings, photography, signage, flyers and print ads (depending on the region). This can run into the thousands depending on the size of the campaign, but is generally a good investment if you reach a large number of potential buyers.
Legal Fees
As when purchasing a property, you will need to engage a professional to draw up a contract and facilitate the transfer of property from you to the new owner. This can be done either by a solicitor or a conveyancer.
Auctioneer’s Fee
This is a fixed fee, meaning you pay it whether your property sells or not. The auctioneer’s fee can be included in the marketing campaign costs or a part of the commission structure. Check the marketing contract drawn up by your real estate agent to see where it has been included.
Staging Costs
These days, having a competitive advantage when it comes to selling your home usually means having a professional staging service come in to arrange your home with furniture, wall art and décor in order to appeal to the widest market. A staging company usually works in tandem with the services of a professional photographer.
Owner Builder Defects (137b) Report
If you have completed building works or renovations in the last 6.5 years and you are now putting your home on the market, you are required to provide an Owner Builder Defects Report (also known as a 137b report) as part of your Section 32 documentation. This a legal requirement for all vendors.
Mortgage Exit Fee
If you are selling your property and paying off your mortgage in its entirety (lucky you), your bank may charge you a mortgage exit fee which covers the cost of processing all the paperwork for this transaction. This can be several hundred dollars.
Bridging Loans and Increased Interest Repayments
Decided to make an offer on a new property before you sell your current home? Bridging finance helps you do this – but it does mean having to pay higher mortgage repayments until your property is sold.
Another scenario – there are market changes (rises in property prices and/or interest rates) between the time that you buy and sell, meaning that your money buys you less when you finally settle on a new home – or your repayments are higher when you start making mortgage repayments again.
Having your Home Vacant Until Settlement
This applies more to investment properties, although it may also be the case if you have already bought and moved into a new property as an owner occupier.
A vacant property will potentially appeal to a wider market but can be a financial strain if you have to make two mortgage payments for a few months.
One way around this is to offer the property for rent to your new owners if they need somewhere to live- a license agreement can be drawn up for this purpose. This means you will receive rental income for a few months from the new owners of the property.
Capital Gains Tax
Capital gains tax is a tax you pay on the profits (capital gains) from selling an asset such as a property. It is generally paid only on investment properties. The amount of CGT tax you pay will depend on the length of time you have owned the property, what it sells for and what tax rate you pay on earnings for the year in which you dispose of the asset.
You can find out more about capital gains tax on the ATO website.
Removalist and Storage Costs
If you have cleared your property ready for staging, you may need to pay for items to be stored while your property is on the market. Moving to a new home also incurs the cost of a removalist company.
If you are selling your home this spring, call The Home Inspection Hub.
We can arrange the following as part of your selling plan:
Vendor (pre-sale) Reports – get the full picture of the condition of your property before you go to market, putting you in control when it comes to dealing with offers from potential buyers.
Owner Builder Defects (137b) Reports – a legal requirement for anyone who has carried out building or renovation works in the 6.5 years previous to selling their home. This report needs to be included in your section 32 documentation.
The Home Inspection Hub has been in operation for over 20 years (starting as our sister company SPI Property Inspections).
We have completed over 25,000 inspections throughout Melbourne, Geelong and Central Victoria.
We send only suitably- qualified inspectors to each job and will communicate with you at every step of the way.
Get in touch today for a free quote and sample report.
Call 1300 071 283 or email info@thehomeinspectionhub.com.au
You can start your free quote request here.
