- Budget for property selling costs, to avoid nasty surprises.
- Vendors may need to cover renovations, agent’s fees, marketing costs, conveyancing, bank charges and removal expenses.
- We explore each one of these costs and estimate the amount.
Selling a property is not as easy as simply signing a sales agreement with your agent and waiting for the right buyer to come along. There are many costs that vendors will incur prior to, during and after the sales process. However, many vendors overlook and certainly underestimate the various costs.
We look at what it really costs to sell your home.
In this guide
Renovations and maintenance
In order to get the highest possible selling price, the property should be presented in its best condition, so this should be your first step.
Renovation costs can vary considerably depending upon property location and type. Some vendors choose to undertake major renovations prior to listing their home for sale, while others may limit themselves to a general tidy-up of the front and rear garden.
As a general rule, vendors should allow enough funds in their budget to complete any unfinished jobs, and to ensure the property is clean and tidy. More extensive preparations may involve installing a new bathroom or kitchen, or even painting inside and out.
Costs can be anywhere between $500 to $20,000, depending upon the work required.
Real estate agent’s fees
Your choice of agent is an essential factor in selling your home. It’s important to have an agent who will work hard for you and get your home in front of as many potential buyers as possible. The agent’s fee can be calculated in a number of different ways.
Percentage of purchase price
Many agents prefer to receive a percentage fee, typically between 1% and 3% of the final selling price. Others may prefer to operate on a flat or fixed fee basis.
Additionally, some agents will ask for a bonus to be paid for a sale price that is higher than expected. For example, if your property is expected to sell for $850,000, you might negotiate with the agent a 2.5% fee for a selling price of up to $850,000, with a bonus of 7% of any amount achieved above $850,000. This gives the agent a serious incentive to obtain a higher price for you.
Some agents will also recommend to vendors that they will receive the best results in terms of price by listing their home for sale via auction. While this may mean achieving a higher price, it also means incurring an auctioneer’s fee. This is generally around $400 - $1,000, depending upon location.
Selling your home also involves marketing, to reach the largest number of potential buyers. Marketing costs are usually paid by the vendor.
Generally, the marketing strategy and campaign is outlined to vendors by the selling agent. It will usually include photography, creation of a floorplan, listing on popular real estate sites such as relaestate.com.au and domain.com.au, press advertising and copywriting.
Additionally, many selling agents are recommending marketing strategies to vendors that include 3D virtual scans, which enable prospective buyers to experience an online walkthrough of the property. This has become increasingly popular, particularly during the coronavirus pandemic.
On average, a marketing campaign can set vendors back anywhere between $4,500 and $10,000 or more, depending on the property type and location.
Just like renovations and maintenance, staging a property can significantly improve the selling price of your home. It’s not essential, and relatively expensive, but may speed up the sale as well as lifting the price.
Staging involves dressing up and presenting your property with appropriate furniture, art and design touches designed to appeal to the purchasers in your target market.
The cost to stage a property depends on your market – whether you are targeting high-end buyers, professionals, first-time buyers or families – and the state and condition of your current furniture. Vendors should allow around $6,000 to $8,000 in their budget for staging costs.
Conveyancing and legal fees
Paying a conveyancer or a solicitor when selling your home is an unavoidable cost. (It is possible to buy a conveyancing kit and do it yourself, but the DIY approach is fraught with danger.)
Your solicitor or conveyancer is a professional who will complete the legal transfer of your title to the purchaser. They will prepare a Contract of Sale, liaising with your agent, and attend the settlement to facilitate it. Depending on your state and location, as well as the type of property, vendors should budget between $800 and $2,000 for conveyancing fees.
Council rates and body corporate fees
As part of the conveyancing process your solicitor or conveyancer will also ensure that any outstanding council rates and body corporate fees (for strata title properties) are paid at settlement. This cost is something that is frequently overlooked, so vendors will need to ensure they budget accordingly.
Many vendors do not realise that their bank will charge fees when they sell, if they have a home loan. Discharge of mortgage fees vary depending on the state where your property is located, and whether there is any early exit fee payable – often the case with a fixed rate home loan. Vendors should allow between $150 to $1,500 for a discharge of mortgage fee.
Once your home has sold, you will, of course, need to move out. Unless you are planning a DIY removal, you will also need to ensure that you have budgeted for the cost of a removalist. Depending on the distance and the quantity of furniture involved, vendors should budget anywhere from $1,000 to $10,000 for removal costs.
Capital Gains Tax (CGT)
Another cost to consider is Capital Gains Tax (CGT), which will be payable on the sale of an investment property. CGT is a tax that vendors are liable to pay if they make a profit from the sale of their asset – the difference between the purchase cost and the eventual selling price.
CGT is calculated by the Australian Taxation Office (ATO) based on the amount of profit made on the asset sale once all deductions have been applied. If you are a vendor selling an investment property you will probably want to seek professional advice from your accountant or financial advisor.
The bottom line
Selling a property, whilst seemingly straightforward, does involve considerable costs. With the average total cost of selling a property estimated to be between $10,000 and $30,000, vendors will need to budget carefully to ensure that the costs listed above do not come as an unexpected shock during the sales process.