Selling property involves expenses that can easily be overlooked, especially when investors focus too much on the profit that can come from an offer. And from agent’s commission and marketing costs, to council rates and legal fees, these costs can easily add up to several thousands of dollars.
It is therefore critical for sellers to factor in all these expenses in order to have a realistic expectation of how much they could gain after a successful transaction.
Median property prices by capital cities
The cost of selling a property can vary significantly in each state, so it is important for sellers to have an idea on how much homes are priced in their location. The table below lists the median property values in each capital city based on the latest figures from Domain’s House Price Report.
Source: Domain House Price Report, September 2020
Costs to consider when selling a property
While selling a home can often result in huge gains, it also entails costs that can be quite expensive. Here are some of the expenses that sellers and property investors need to take into consideration:
1. Agent’s commission
Real estate agent commission is one of the biggest costs associated with selling a property. The fees typically range between 1% and 3% of the property’s value and varies depending on the location of the home. The table below lists the average real estate commission by state, according to the latest figures from OpenAgent.com.au.
2. Advertising costs
This can set sellers back around a few hundred to several thousand dollars depending on the marketing campaign they decide to run. The internet is one of the most cost-effective advertising tools – but then again, a top-tier listing that appears at the top of search results can cost property sellers up to $2,000. On average, experts say that advertising fees can cost around $5,000.
3. Capital gains tax
Capital gains tax (CGT) is incurred when selling an investment property or if a home was used to generate income. This is added to the seller’s taxable income. Our capital gains calculator can help provide an estimate.
4. Conveyancer’s or legal fees
A conveyancer or solicitor is tasked to organise all legal documentation required for selling a property. Hiring a conveyancer typically costs between $500 and $2,500.
5. Council rates
As the current owner of the property, sellers are responsible for council or body corporate rates up to the day of settlement. The conveyancer should be able to assist sellers in finding out how much fees they need to pay.
6. Lender’s fees
Many banks and lenders charge a one-off discharge or settlement fee that covers the cost of paperwork associated with the completion of a mortgage. The fee typically ranges from $150 to $400.
First impressions last, as the saying goes – and this can cost property sellers and investors quite a bit. Staging a home for sale can help attract buyers but it can also make sellers between $2,000 and $8,000 poorer.
Renovations, although completely voluntary, can add significant value to property. The cost, however, depends on the type of updates sellers choose to take on.
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