The cost of selling a property explained

Are you thinking of selling your home?

Are you wondering how much does cost to sell a property?

Well… there is a whole host of costs when it comes to selling a property, from conveyancing costs to agent’s fees and marketing expenses, meaning there can be a lot for property sellers to think of.

After all, successfully selling a home requires a vendor to make a smart investment in the right things and at the right time.

Selling a property needs to be a logical and well-researched process, not one driven by emotion or fear, and the more knowledge and insight you can get before taking the leap, the better it will be for your finances.

So, what fees are associated with selling a home?

Here is a complete list of costs that vendors can expect to be lumped with when selling a house, including any “hidden” costs, which you need to consider before planning your sale.

1. Renovations and repairs

First and foremost, before selling a property, a vendor needs to make sure they present their property in the best possible light in order to attract the right buyers with the deepest pockets.

Anything from a spring clean and garden tidy to fixing general maintenance or a lick of paint, the importance of presentation is often underestimated by vendors and could cost you that high ticket selling price you’re looking for.

But it’s important not to spend too much and over capitalise – there is no point renovating major rooms if it’s not needed or if it’ll cost more than you’ll gain from doing it.

2. Home staging fees

In the same vein of presentation, vendors should consider having their home professionally staged when they come to sell.

Staging a house for sale has been rising in popularity over the past 10 years with some experts estimating that it can add an extra 5-10% to a property’s sale price.

This involves renting the best furniture & decor for both indoor & outdoor spaces and will help highlight the best use of available space as well as hide those little flaws.

The main aim of staging is to invoke a sense of liveability in the prospective buyer’s mind to help with the decision-making process.

To give an idea of how much a full home staging package could cost you for six weeks, expect to pay in the region of:

• $1,995 for a studio/one bedroom apartment
• $2,500 for a two bedroom apartment
• $4,500 for a three bedroom house
• $6,500 for a four bedroom family home
• $10,000 or more for larger homes with five or more bedrooms

3. Marketing fees

Marketing fees are generally tailored for each specific property and vendor, and can include anything up to professional photography, floor plans, advertising copy, a signboard, online advertising packages and even a walkthrough video.

The seller is usually responsible for covering all the costs involved in marketing their property for sale, the fees for which can vary greatly depending on the state, property value and type of marketing you opt for.

Generally, the marketing budget increases with the value of your property, but it makes no sense to try and sell a secret so this is one cost I would not skimp on.

And you may be able to get your selling agent to contribute to the marketing budget a little by offering for sale boards or social media marketing at no cost.

Vendors can expect to foot a bill for anything between a few thousand dollars to $20,000 depending on the location and property type.

4. Conveyancer or solicitor fees

Conveyancing is the legal process of transferring ownership of a property from the current owner (vendor or seller) to a new owner (purchaser or buyer).

Generally, a conveyancing transaction consists of three main stages: Pre-contract, pre-completion and post-completion.

These three steps include any work needed when buying or selling a property, subdividing land, updating a title or registering or changing an easement.

This can include assisting the transfer of ownership, including home loans and any other conveyancing activity.

It’s interesting to note that conveyancers don’t necessarily have to be solicitors, but they can undertake the same type of work.

For a seller, a conveyancer will do the following:

• Complete legal documents
• Confirm the seller is the legitimate owner
• Review the contract of sale and vendor disclosure statement to look for any unusual clauses or raise any red flags
• Check the property meets council standards
• Give any advice on conditions that could protect you during the process
• Arrange any finances if necessary
• Arrange payments of deposits and stamp duties
• finding out if any government authority has a vested interest in the land or if any planned development could affect the property
• finding out any information that may not have been previously disclosed such as a fence dispute or illegal building work
• Represent you and your interest in dealings with the buyer, such as asking questions, finding out information, requesting extensions etc.

And the cost?

Fees generally vary between conveyancers, and solicitors, as there is no “official” charge and in addition to the service fee, you will usually also be charged for ‘disbursements’.

Disbursements are outgoings and expenses incurred by your conveyancer and can include a title search, certificate fees, photocopying and paperwork registration costs.

Outside of these other costs associated with your conveyance (the exchange of title) could include:

• Building and pest inspections
• Survey report
• Establishment of mortgage
• Homebuilding insurance
• Valuation fees
• Mortgage insurance
• Stamp duty and mortgage duty
• Levies, if the property is in a strata or community scheme
• Council and water rates.

Legal practitioners and conveyancers must disclose their costs to clients, including the client’s right to negotiate a costs agreement, receive bills and be advised of changes.

In total, the average cost of conveyancing is roughly between $1,110-$2,200.

5. Auction fees

A good auctioneer can mean the difference between a successful sale and a mediocre one or even no sale at all.

Great auctioneers can create a lively atmosphere and a real sense of urgency in bidders which can then in turn encourage a higher bidding price.

If you’re lucky, under the right circumstances, selling at auction could even help a vendor get a much higher sale price than they would have done with a private sale.

In terms of cost, vendors should expect to pay an auctioneer between $400-$1,000 to sell your home depending on your location and auctioneer experience.

This fee is for the auctioneer’s service and is separate from the real estate agents fees unless it is explicitly bundled into the agent’s costs.

Some agencies have an in-house auctioneer so this cost can be avoided.

But it’s not just the auctioneer themselves who come at a cost when auctioning a property.

And there are other “hidden” costs that could be associated with selling at auction, such as:

• Signage
• Real estate websites
• Newspaper advertising
• Flyers
• Community notice boards
• Personal invitations
• Social media

This may come under a marketing fee if an agent is using an in-house auctioneer or billed separately if using an external professional.

6. Council rates and body corporate fees

Depending on when you sell the property, you’ll most likely have to pay at least a portion of the council rates for the current quarter.

If you’re selling a unit or apartment in a strata building, then you’ll also need to pay a portion of the body corporate fees.

These rates form part of the settlement costs so it’s important to check with your conveyancer to find out how much you’re liable to pay.

7. Selling Agent’s fees

Once the pre-sale preparation, staging, marketing and auction yield a successful sale, the vendor will need to pay their agent’s commission.

The selling agent’s fees will also vary depending on the agent and value of your property and can either be a flat fixed fee or as a percentage of sale.

As a general rule, vendors can expect to pay around 1.5 – 2% +GST of the sale price, but this is not a fee I would skimp on.

The cheapest agent is the one that gets you the best price for your home, not the one that charges the lowest commission.

You want your selling agent to be a great negotiator working on your behalf. How good a negotiator are they really if they easily cave in when you ask them to lower their fees?

But there is also a way to incentivize agents into getting a higher price.

A vendor could agree to a fee up to a certain value, then a higher fee above than.

For example, pay 1.75% if they sell your property for up to $1 million, but 1.75% if they get you a price over $1million.

8. Mortgage discharge fees

If you have a home loan on the home you’re selling, you may need to pay your lender a discharge or early exit fee in accordance with your home loan agreement.

While the government banned exit fees on all variable rate mortgages in 2011, break cost fees still apply on fixed loans.

If you needed to pay back a $550,000 mortgage fixed at 4.70% within the fixed period, you could be looking at around $3,300 in break costs.

You should make sure you find out the break cost fee on your mortgage prior to sale to ensure you don’t get hit with a surprise bill.

9. Capital Gains Tax

If you’re an investor looking to sell a property, you’re likely to be subject to capital gains tax (CGT).

CGT doesn’t apply if you’re selling your principal place of residence.

So, if CGT does apply to the sale of your property, how much will it cost?

This isn’t a straightforward answer.

CGT is calculated as the proceeds you make from selling the property minus the cost base.

The cost base refers to the costs of both selling the property and also the initial costs of buying the property in the first place.

There is no CGT tax rate, but your “capital profit” is added to your regular income in the tax year you make your sale and tax is paid according to your new tax bracket.

You’ll probably need the help of your accountant, as there is another “hidden cost” when calculating your capital gains tax obligation because when selling an investment property you must add back all the tax benefits of the depreciation you claimed over the years.

How much it costs to sell a house: a quick summary

So as you can see there are many fees involved in selling a home but in summary…

• Renovations and repairs – varies based on the property
• Home staging – starts from $2000 to $4000 depending on the size of the home
• Marketing – between $1,000-$20,000 depending on the location and property type.
• Conveyancer or solicitor fees – about $1,100-$2,200
• Auctioneer’s fees – $400-$1000
• Council rates and body corporate fees – varies depending on property type and timeframe
• Real estate agent’s commission – between 1 and 2 per cent of the sale price or an agreed fixed fee
• Mortgage discharge fees – varies based on the lender but expect to pay at least $300
• Capital Gains Tax – varies based on the property and owner’s situation

7 tips to avoid facing unexpected costs when selling a house

1. Do your research into how much everything costs
2. Work out how much you need to repay on your home loan
3. Search for the right agent
4. Take time to repair anything which could cost you in the sale price
5. Work with professionals
6. Use your head, not your heart
7. Negotiate on fees

What will your property sale cost you?

So there you have it.

As the above shows, there are many costs involved when selling a house or unit, some of which you might not even realise you needed to budget for. You can use our home buying and selling calculator to get a better idea of what it might cost you.