It costs $10,000’s to sell a home but where does all that money go? Are there any hidden costs? In this blog we outline all of the costs associated with selling a home.
Typically, the biggest expense when selling a home is the fee paid to the agent. 99% of agents charge a commission on the sale price which can range anywhere from $5,000 to more than $50,000 depending on what your home is worth. The commission charged is typically between 2%-3% for most areas.
The other significant cost involved with selling your home is marketing. This covers the out of pocket expenses incurred by your agent to market your property for activities including photography, online advertisement and the signboard. A typical marketing budget will be between $2000-$5000 however how much you spend and what activities are conducting are ultimately your decision although your real estate agent should have a big input into this. Some agents will include the marketing cost as part of their commission however others will add the marketing spend onto their fee so this is an important consideration when engaging an agent.
Any real estate agency which earns more than $75,000 per year is required to withhold GST. This means that 10% of the agent’s fee and marketing budget must be paid to the ATO. It is important to always ask an agent whether the amounts they’re quoting include GST and factor that into your calculations.
The total conveyancing cost is typically around $1500 when selling a property and this is normally paid at settlement from the proceeds of the sale. To put your home on the market, you must have a Contract of Sale. This is put together by the same Conveyancer or Solicitor who will act on your behalf for the sale. This is normally included as part of their total fee however you may need to cover the hard costs associated with preparing the contract such as government searches.
We always suggest leaving a buffer of $5,000 for any odd or unexpected costs. This could cover things like building inspections, maintenance, repairs, further legal advice or any other unexpected costs. You are always better to have a safety margin and not use it than come up short.
While we have outlined what costs are associated with selling a home, a key consideration for many people is what needs to be paid upfront. Stay tuned for our next blog where we will explain how much money is needed upfront to put your home on the market.
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