Selling a property sounds like it should be straightforward, but unfortunately, it's not as simple as finding a willing buyer. If you're new to real estate transactions, you need to be aware of the real costs of selling a house before you put your home on the market.
Some of the costs of selling a house are unavoidable. These include agent's fees, conveyancing costs, bank charges and marketing expenses. Others are what we'll term 'voluntary costs' - think pre-sale renovations, home staging and garden maintenance.
Here are the three major costs of selling a house and the other voluntary or 'hidden' costs where you can save money.
It’s always a good idea to speak with a conveyancer when calculating the costs of selling a house. At Conveyancing.com, we can simplify your paperwork to ensure the entire process runs as smoothly as possible.
Cost 1: Agent's fee
While many people try to sell their homes without the help of a real estate agent, this can backfire badly. Real estate agents are professionals and know how to hustle for the best price for your house. There are many areas where you can cut the costs of selling a house, but removing the middleman is not recommended.
There are two types of real estate agent fees. The first is a flat fee that covers the costs of advertising and marketing your property and stays fixed no matter what your property sells for. The second is the commission fee whereby the agent gets a certain percentage of the final sale price.
The average commission rate for a real estate agent is 2-3% of the selling price. Commissions vary, but if your home sells for $550,000 you might pay up to $16,500 in agent fees.
It's important to note that not all agents structure their fees in the same way. Some use a 'sliding' or 'tiered' structure where an agent might receive 2.13% commission on the first $900,000 and 4.56% on anything above that. This is a practice most commonly seen on higher-priced properties.
Keep in mind that the goal when reviewing the cost of selling a house is not to save as much money as possible on your agent's fee or commission. It's to make the most profit from the eventual sale. Choosing the right real estate agent is therefore paramount.
Interview a few different agents in your area. Look for someone who is honest, prepared, has a good track record in your suburb and is a skilled negotiator. It's important to ask potential agents about their commission structure when you first interview them as it can sometimes be negotiated. That said, while a lower commission rate may be tempting, it's usually worth the expense to choose an agent who has the best intentions, experience, and credentials.
Cost 2: Conveyancing fee
Conveyancing is the process of transferring legal ownership of a property from one person to another and is an essential part of every real estate transaction. It is crucial to contact a conveyancer or lawyer before selling a property. While it is legal to sell your home without help from a conveyancer, you open yourself up to costly mistakes in the settlement process and still have to pay the government taxes when transferring the property title.
In Victoria, intending sellers must prepare a Section 32 statement, also known as a Vendor's Statement. A Section 32 statement includes essential information about the property being sold that may not be apparent upon inspection, including:
Owner-builder warranty insurance
Utilities connected and supplied to the land
Declaration if located in a bushfire-prone area
A copy of the title and plan of the house
A Section 32 statement can protect your rights as a vendor selling a home and must be prepared by a property lawyer or conveyancer. If a Section 32 statement is not prepared correctly, it can waive your right to retain the purchaser's deposit if something goes wrong and they cancel the purchase of the property. So choose your conveyancing specialist wisely and ask what they'll do to protect you as a seller.
A good conveyancer will make sure all of the documents for your Section 32 statement are prepared accurately within a small timeframe. They will ensure all legal formalities are undertaken correctly and that the contract of sale is in your best interests. They can often arrange for the purchase and the sale to settle on the same day.
Selling a house entails a fair amount of legal paperwork, so it's wise to ask for a breakdown of all likely costs before you enlist any conveyancer to work for you. The cost to sell a house can vary considerably between conveyancers and lawyers. When you request a quote from either, keep in mind that in addition to the service fee, you'll also need to pay 'disbursements', which reflect costs incurred through third parties. Ask for a ‘cost range‘ for disbursements in your quote and keep a list of questions in mind to determine if a conveyancing specialist is suitable for you.
Cost 3: Marketing fee
When you sell a house, a real estate agent will typically recommend a marketing campaign designed to get you the best sale price possible.
Each property transaction is unique, and depending on your location, you may spend more or less on marketing collateral. It could include a signboard out the front of your house, a listing on a real estate website, a photo shoot by a professional photographer, the creation of a floor plan, print advertising, direct mail-outs, or all of the above. The average marketing campaign in the Melbourne market costs between $6,500 and $8,000.
Many baulk at the cost of marketing because they feel they are already paying the real estate agent a premium to make the sale. However, marketing obviously helps facilitate the sale by getting your property out into the public eye. Don't underestimate the power of good copywriting, well-styled photos and a superb advertising campaign when it comes to maximising sales price.
Being listed on top real estate sites like realestate.com.au and homely.com.au can make all the difference to how quickly and profitably your home gets sold. If you put your house on the market without quality photos and a decent marketing budget, you're preparing yourself to fail. Commit to the marketing process by including it in your list of unavoidable costs.
Before selling your house, you'll obviously want to give it a spruce up. While this adds to the cost to sell a house, how much you spend is up to you. Work you might want to undertake includes:
House cleaning – this is a must for every home
Completing repairs – fix anything that is broken or damaged
Renovations – revamping your bathroom or kitchen can drastically improve your sale price
Garden maintenance – your house's street appeal is important
Repainting the walls – if your paintwork is chipped or peeling, buyers will notice
Replacing the carpet – also consider refinishing hardwood floors
Home staging – hire a professional to make your home more presentable
While adding a new kitchen for the sake of selling is not an option for everybody, there's a lot you can do to improve the presentation of your home without spending a fortune.
You will always need to budget for the cost to sell a house. To help manage the costs and processes of a property transaction, you should always seek professional advice. Talk to a conveyancer as soon as you decide you're selling your house to get sound legal advice every step of the way.
A typical conveyancer can cost anywhere between $800-$2,000 depending on the nature of the sale and the State in which the house is located. However, with the arrival of online conveyancing services, you can get dedicated and expert advice for a fraction of the traditional cost.
Conveyancing.com brings you a dedicated and experienced team of legal practitioners who can provide you with the legal support and guidance you need throughout the entire process of conveyancing. As experts in property law, we can help set your price expectations and ensure a positive selling experience.
Our online processes speed up the key stages of conveyancing including contract exchanges, property inspections and title searches. We can ensure that documents for your Section 52 are prepared accurately within a tight timeframe and offer real-time tracking on all document reviews. We record all our work online, which means it's as simple as logging in from your computer or smartphone to check if things are moving forward.
Pre-sale advice can save you valuable time. Contact Conveyancing.com today to talk about the cost to sell a house, as well as the processes and legalities.