How Much Does It Cost to Sell a House (Or Apartment)?
The old adage that you need to spend money to make money could not be more accurate when talking about the costs of selling a house (or apartment). There will be agents' fees, marketing expenses, and conveyancing costs to consider, and depending on how long it takes for your property to sell, these figures can be quite significant. You are not the only person looking to sell property, so the competition also needs to be considered.
Still, it's a necessary evil for a much greater gain, so rather than be deterred, be informed and answer the question "how much does it cost to sell a house (or apartment)?" with this guide compiled by Urban.com.au.
1. It starts with the right agent
The main reason why you should be aware of the costs involved in selling a property is to ensure that the exercise will provide the financial gain you are expecting. The three most significant expenses you will need to consider are
Conveyancing
Marketing
Agent's fee/commission
Choosing the right agent can be a crucial driver in the success of your sale, and this is not a decision that should be made on cost alone. The best candidate to represent you should have a proven track record of successful sales and happy clients as opposed to just the lowest fees.
Let's look at the three main costs of selling a house, why they exist, and what you should prepare for.
2. Conveyancing fees
Conveyancing entails the legal transfer of ownership for your property and is a required part of every real estate purchase. To perform this correctly, you will need licensed conveyancers and solicitors, and it is in your best interest to choose someone local.
A local solicitor has local knowledge, which can be invaluable when it comes to things like special conditions or information specific to a particular area. Conveyancing costs can land anywhere in the ballpark of $800 to $2000.
3. Marketing costs
The size of your marketing budget has a direct correlation to how effective and speedy your sale will be. There is often a lot of competition in the housing market, so ensuring that your property stands out above the crowd is crucial.
The cost of marketing your property falls solely on you. It is common that your agent will recommend a particular marketing campaign, but you are able to tweak this as you see fit. We strongly recommend listening to the agent, especially if you have followed the first point and picked them for their knowledge and expertise, but some of the common marketing strategies you may want to consider can include:
A 'For Sale' board in front of the house
A listing on realestate.com.au
Professional photography
A clear floor plan
Engaging copywriting
Various press advertising
You can also make use of various social media or free listing websites to increase your reach without having to add more to the marketing budget. For the most part, however, the size of your marketing budget determines the strength of your sales campaign.
A marketing campaign can cost anywhere between $4000 to $10,000 on average.
4. Agents' fees
When deciding on your real estate agent, it is most common for there to be two options for how they charge their fee:
A flat fee
This will be a fixed fee agreed upon between you and the agent regardless of what your property sells for
The percentage of sale fee
As the name suggests, the agent will receive a certain percentage of the final sale price, often ranging from 1% to 3% depending on property value and competition
When deciding between these two options, you will need to keep in mind that while a fixed fee locks in your cost, an agent may work harder to get the best sale price if working for commission.
In some cases, vendors agree to incentive bonuses for the agent. This is usually a percentage-based bonus that is paid if the sale price is higher than the agreed reserve. It is common for this to be around 10% of the amount over the reserve.
Regardless of which option you take, it is vital to discuss and agree to all fees before signing anything with the agent.
5. Other fees
Outside of the main three costs, you will need to consider any applicable lender fees if you have a mortgage on the property you are selling. When paying off your remaining mortgage after the sale of your property, you will likely need to pay a discharge or early exit fee. This varies significantly by a financial institution and was probably explained to you when you first signed for the loan.
In some cases, particularly if taking out a new loan on a new property with the same institution, you can negotiate a waiver of this fee. It is also important to note that the discharge process can take anywhere between 14 and 21 days.
Maximising your sale price
You may wish to outlay some extra funds on maintenance or professional styling to help increase the attraction and saleability of the property. Keep in mind that you are trying to convince a potential buyer walking into your house that they love it and could comfortably live there. Consider the things people may look for in a new home. Styling makes the property as appealing as possible, to help the decision-making process for the buyer.
The cost of styling is very subjective. You may have an interior-design eye and are capable of arranging the rooms in such a way that they look best, or you may need to outsource this task to get the most out of your space. Either way, the importance of a well-presented property is crucial. It could be as simple as some light garden maintenance, or you may need to spend some money or more extensive repairs to damaged doors or dented walls.
Never underestimate the impact of a fresh coat of paint and some good quality carpet cleaning.
The (real) costs of selling a house (or apartment) that you need to be aware of
As with any sale, you need to take the costs of the process into account when determining your profit. If you have waited long enough, or are lucky to be in a boom area, the expenses listed above will be but a small dent in your overall profit.
If the margin is tight, this may deem your property sale a fruitless venture. This is why understanding the above charges in the context of your budget is crucial to the successful sale of your property.
Exact costs will also depend on which state your property is in, and you can also obtain an online property value estimate to ensure you are working on the correct budget. It is always a good idea to book a property appraisal which will shine a light on which maintenance tasks can help increase your home’s value.
If you have an ideal sale date in mind, you can divide by the number of weeks until said date by your expected costs to form a realistic budget. Just remember to leave a buffer for any unexpected expenses that may arise — being generous when budget planning is never a bad idea.
