We sell houses for all different reasons. It can be personal circumstances, future plans, upsizing to a bigger property or downsizing to a smaller house, mortgage stress, not a fan of the location, change of workplace, retirement, health problems, cashing on the substantial growth/equity in investment, or getting out of a negative gearing property (the property is costing too much to keep), finding a more lucrative investment, management stress, etc. But remember timing is always the key. Will this discuss these in a separate article.

Though it can be any reason for selling the property, there are certain costs involved in this selling process. Let’s explore these costs.

There are three main costs involved in the selling of property and few other associated costs.

• Real Estate Agent’s fees. This fee can be structured as either a fixed fee, fee as a percentage of actual selling price of the property or bonuses with a mutual consent.
• Marketing and advertising cost
• Conveyancer charges,

Let’s go a bit deep in each cost. To start with, if I must rank the highest cost in selling the property, it is YOUR EMOTIONAL PRICE. If you are not an investor for whom buying and selling is a normal process then only you can feel the time, energy, focus, routine disruption, emotional uprooting, memories among other factors that make add to your emotional cost associated with the sale of property.

Real estate agent’s commission, fees and bonuses

As a seller you must discuss this cost upfront with your agent:

1. Fee as a percentage-of-selling-price:

This fee is set as a percentage of the ‘’selling price’’ achieved. Remember, this fee is not a percentage of the ‘’listing price’’ or the ‘’agreed price’’. Some sellers may get confused in this and the best way is to discuss this fee in detail with your agent. The agent ‘’must’’ take you through, before you sign, all the points of the selling authority where this fee is clearly described on the first page itself. It is a requirement of the Real Estate and Business Agent’s Act and the Code of Conduct that the agent has a duty of honesty, care, diligence and skill and that the agent must not engage in a misleading or deceptive conduct. It thus becomes a requirement for the agent to clearly describe in percentage and ‘’figures’’ how this fee will work.
Example:
If the property is sold for a price ‘’less than the listing price’’, then you pay less. Let’s calculate,
Agreed commission percentage: 3%
Listing price: $1,100,000.00
Actual selling price: $1,050,000.00
Commission: 3% of $1,050,000.00 = $ 31,500.0
If the property is sold for a price ‘’above the listing price’’ (which happens a lot in a booming market but mainly achievement of above market price will depend on the negotiation skills, knowledge, communication tactics and most important the enthusiasm level of your agent) then you pay a higher fee.
Agreed commission percentage: 3%
Listing price: $1,100,000.00
Actual selling price: $1,300,000.00
Commission: 3% of $1,300,000.00 = $ 39,000.00

2. Fixed fee:

This is a flat/fixed fee agreed between the buyer and the seller at the time of entering into a selling agreement. Here, it does not matter whether the property is sold at the listing price, above or under the listing price, the fee is set.
Sometimes, certain property owners don’t feel comfortable with percentages and are more inclined towards fixed fee structure, for them this is the best and most suitable option.
Thus, if you agreed at the fix fee of $35,000.00 whether you sold your property for $1,050,000.00 or $1,300,000.00, your fee will be $35,000.00.

3. Bonuses:

Sellers agree for bonuses with their agent as an extra incentive where the sellers are looking at achieving an exceptional result. This optional extra incentive may be agreed if the price reaches a certain mark or in other words, where the property goes above the agreed reserve.
Example:
Agreed commission percentage: 3%
Listing price/Reserve: $1,100,000.00
Bonus: 10% of any amount above $1,100,000.00 reserve.
Actual selling price: $1,300,000.00
Amount achieved over reserve: $200,000.
Basic commission: 3% of $1,100,000.00 = $33,000.00
Bonus: 10% of $200,000 = $20,000.00
Total commission: $53,000.00 ($33,000.00 + $20,000.00)

Marketing and advertising costs:

Once you have decided to sell your property and have entered into a selling agreement with your agent, you now need to focus on the advertising and marketing your property. Sellers must aim at marketing their property in a way to maximise its reach to the widest possible audience. You must keep in mind the property achieves highest viewership, attention, and interest during the first 14 to 21 days of the campaign and an effective, targeted and comprehensive marketing can lead to outstanding sales results. Obviously, there are costs associated with marketing, but the return can be much more rewarding and sometimes beyond expectations. We all will agree that marketing is a considerable investment, and it thus becomes important to get it perfectly planned right from the beginning.

Some sellers decide to sell their property off-market, in this way they have completely ignored the larger market by not reaching to the wider audience. This is done for many reasons sometimes financial and sometimes personal and privacy issues. But my recommendation is, if you do not have personal or privacy issues, you must market your property efficiently.  Take marketing as an ‘’Investment’’ which will only lead to gains and high return on your investment.

For simple calculation your marketing budget will vary according to your property value and will hover around 0.5% to 1% of your property value. When we go into luxury properties advertisement cost can go higher and so will the returns. There are few things you can do for an effective marketing campaign like,

• Professional photography and video shoot,
• Signage on street front,
• Drone photos and videos,
• Descriptive writing,
• Distributing flyers & information pamphlets,
• Social media advertising etc.

Advertising your property also creates competition in the market and lines up the best suitable buyers for your property. Do not fall for the trap where someone advises you to sell the property off market just to save advertisement cost where you can easily afford one. A good example is, when you start an effective marketing campaign for your property visible to the entire audience nationwide it will attract buyers not only from your suburb or local neighbourhood or the city but interstate too. Additionally, you will find there are investors who have been looking to buy an investment for a long time or the first home buyers who are now able to buy their dream home and have the budget that you are targeting. All this will create competition and you will no longer be in a boat where beggars are not choosers.

Mathematically, I can say, Higher Exposure = More Attention = Higher Level of Interest and Curiosity = Higher Competition = More Footfall into Property = More Chances of Offers Coming in = Effective Negotiation = Achievement of Top Market Price.

Conveyancing fees:

Conveyancing is the legal or statutory process of transferring the title in the property from the seller (owner) to a buyer (new owner). Since this is a legal process, so there are some associated legal fees that both the seller and the buyer need to pay to their conveyancers. The conveyancer or solicitor on your behalf will prepare legal documents for you to sign and will oversee the entire settlement process. Settlement costs could range from $800 to $2400.

Mortgage discharge fees and other lender costs:

Those sellers who have mortgage left on the house they are selling must bear some costs when the sale is finalised. They may need to pay mortgage discharge fees/settlement fees which normally applies for both fixed and variable home loans. If you as a seller are settling your fixed home loan before the fixed term is up then there can be an additional break fees. Normally the mortgage discharge fees and the break fees range between $150 to $1500.

Capital gains Tax:

Capital Gains Tax (CGT) is the tax you pay on profits from disposing of assets including investments, such as property. If you are an Australian resident and selling your home, you may not need to pay Capital Gains Tax provided you meet below conditions.

1. House need to be your home since you have owned it. In other words, you and your family resides there.
2. The house should not have been used for any business or rental purposes. Basically, meaning it should not have been used to generate any income.
3. Size of the property should be two acres or less.

Below link can be helpful. Additionally, talking to your account will be a good idea to understand if you have any CGT implications.

https://www.ato.gov.au/Calculators-and-tools/Capital-gains-tax-property-exemption-tool/

Moving Cost:

Moving costs are easy to forget but they will surely occur. Reason being the sellers need to move their furniture, boxes, and other household items from their old property to their new home. These costs will depend on several things like,

1. Services you choose, if you want the removalists to arrange for boxes, pack your belongings, and wrapping.
2. Is the property easily accessible? Time needed and labour costs can go up if access to the property is difficult for example, narrow staircases, lack of parking etc.
3. Quantity of items being moved,
4. Distance and time involved in moving. If you are moving nearby then maybe you can take help from family and friends perhaps pizza, some drinks and helping them move next time can save you some money. If you are moving long distance like interstate, then you might have to take services from removalists or hire a company who can take care of your belongings and keep a track of them. Removalists normally charge anywhere between $65/hr to $75/hr, again these costs can vary depending on the services chosen.
5. Transportation and insurance costs.

We will recommend going online and check the websites of removalist companies and see their reviews. Additionally, it will be a good idea to take a few quotes so that you can compare the costs and services offered.

Staging Cost:

As it is said, it’s all in the presentation. Staging will help increase an interest in your property. It will maximise the features and minimise the downsides thus creating a distinction in the market. Presenting your property in a way where potential buyers feel belonged and have a ‘wow’ factor will definitely go in your favour as a seller.

The whole idea behind staging or styling is to bring the best out of your property so that it looks more attractive and appealing. This will help in not only selling the property at a better price, but will also sell the property faster than the competing properties in your area because you don’t want to get stuck for too long into the competition.

Staging the property will help potential buyers imagine themselves living there, feeling attached, imagining how and where they will place their furniture, all this creates an ‘’emotional connect’’. Once visitors are emotionally connected with your property this will create a competition amongst them to place offers. In turn this will help your agent to negotiate for you to get an above market price.

Cost of staging depends on various factors like,

1. Your budget (that’s the most important factor)
2. The size of the property,
3. Number of bedrooms,
4. Single storey or double storey,
5. Duration for which the staging is needed,
6. Level of customisation required. Etc.

Expected investment in staging from $700.00

Auction Fees:

As a seller if you prefer to auction your house then you will need to pay an auction fee. Auction is a live event, and a good auctioneer can fill this event with energy, create a sense of urgency and competition thus making the event successful by delivering a high sale price.

The cost of auction depends on,

1. The type of property.
2. Location of property.
3. Marketing budget.
4. Your choice of agency and the auctioneer.

Sometimes this fee can be included in your agent’s commission. Auctioneers charge anywhere between $400 – $1,000.

Selling your home with Bargoti Real Estate:

If you are a home seller, you would realise that your house is the most or one of the most important assets of your life. Here, your choice of the agency and the agent is very important. We are a boutique agency and a family business and for us nothing is more important than delivering a 5-star customer service experience by meeting all the needs of our clients and ticking all the boxes that lead to a successful sale with nothing less than the highest possible market price for your property

We work hard for you so that you keep the most in your pocket. Our guarantee is an exceptional 5-star customer service, going beyond the 100% of our best efforts, guiding you throughout the way of the sale process. We believe in ‘’QUALITY OVER PRICE’’.

Click here now and we’ll be in contact to discuss how we can help you and your family.

Source:

https://www.westpac.com.au/personal-banking/home-loans/next-home/cost-selling-house/

https://www.anz.com.au/personal/home-loans/tips-and-guides/typical-costs/

https://www.anz.com.au/personal/home-loans/tips-and-guides/typical-costs/

https://www.commerce.wa.gov.au/consumer-protection/buying-and-selling-home

https://reiwa.com.au/the-wa-market/resources/guides/wa-first-time-seller-guide/

DISCLAIMER – The information and opinion provided is for guidance and general informational purposes only. The sole intention is to provide general understanding of the subject matter so the readers can assess whether they need more detailed information. The information provided on this website should not be regarded as a financial, business, legal or real estate advice and it is strongly recommended that the readers should seek their own independent financial, business, legal or real estate advice. While every effort has been made to ensure that the information and the material is correct and up to date at the date of publication. However, we do not guarantee or warrant the accuracy or completeness of the information provided as the factors like changes in circumstances after the time of publication, may impact such accuracy or completeness. Bargoti real estate will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.