Selling a house also involves shelling out some money. The three main things you need to budget for are real estate agent fees, marketing costs, and conveyancing fees. Some sellers choose to forego an agent to save on costs, but if you do the same, you should prepare for the possibility of your home not selling fast.
If you’re selling your house soon, here’s a guide on how much money you may need to prepare:
1. Real Estate Agent Fees, Commission, and Bonuses
Hiring a real estate agent takes a load off your shoulders. They’ll do all the difficult tasks for you, such as listing your property on the market, marketing your property, taking care of legal matters, and negotiating contracts. They also have access to a large number of home-buyers, hence being able to sell your home faster compared to selling it all by yourself.
Your real estate agent will inform you about their fees, which could be a flat fee or a commission. A flat fee is an agreed rate between you and your agent that would remain fixed no matter what your house sells for. The benefit of this is that you can already budget for the amount long before your house gets sold, but the disadvantage is that your agent may prioritize making a quick sale over selling your house for the best price possible.
On the other hand, a commission or a “percentage of sale” fee is the amount received by your agent depending on how much your house sells. In Queensland, for example, the average commission rate is 2.8%, so if your house sells for $500,000, then you need to pay your agent around $14,000. If your house sells for a higher price, the commission rate will also increase.
Some agents may ask for a bonus fee as well, apart from a commission. You pay your agent an incentive bonus if your house sells above the agreed reserve. For example, if you and your agent agree on a percentage-based bonus, and your Queensland house sells for $550,000, which is 10% more than your reserve of $500,000, then your agent will receive a $14,000 commission (for the price of $500,000) and a $5,000 bonus. (10% of $50,000 above reserve)
You can negotiate commission and bonus rates with your agent. Make sure to hire an experienced one who will put your preferences into consideration, not someone who’ll force their requirements on you.
2. Marketing Costs
You will cover all marketing costs if you’re putting your house up for sale. Costs may fall in between $6,000 – $8,000, or come in a range of $4,500 – $10,000. You can put up an ad for your house on a board standing right in front of the property, or through listing your home on a real estate website. Your agent should recommend a marketing campaign that’s effective.
3. Conveyancing Fees
Conveyancing is a required process for every real estate purchase in Australia. It refers to the transfer of a property’s legal ownership from person to person, in which case is you and the buyer. If the property is located in Queensland, a knowledgeable and licensed conveyancer from Townsville city can facilitate the process. You may need a budget somewhere between $800 – $2,000 for conveyancing.
The costs of selling a home can be hefty, but in return, you’d be enjoying the benefits in no time. Before selling your house, it would help to determine if the timing is right, both regarding the market’s condition and your own circumstances. Consult experts and weigh your options wisely.