Congratulations! You have sold your home. It feels like yesterday that you moved in, and now the property has settled and you moving on to bigger and better things! All the costs of marketing the property, renovations and touch up as well as legal fees are now all a thing of the past. However, there are still some necessary - and considerable - final costs to settle once and for all.
1. Real Estate Agents commission
Real Estate Agents are regulated professionals and it is in their interests to sell your home as quickly as possible for as much as possible. The agent’s commission is a fee between 1-2% of the total sale value of the property. This fee is negotiated when you choose your estate agent and is not paid until the property is actually sold.
There are a number of different ways to set this commission structure up. Don’t be afraid to ask what you get for the fee, how they are different from other agents (they may have larger market share or more inclusions such as an inhouse auction - which might save you auctioneer fees.
You can also set up an incentive scheme whereby the rate of commission increases the more the house is sold for, or the quicker it is so sold and so on and so forth.
2. Moving costs
Moving costs of course vary according to the amount and type of belongings are taking with you and where you are moving to! Moving costs are high, and so make sure that what you are moving is worth keeping! If you moving from Brisbane to Perth for example, you may want to sell and repurchase the king-size mattress on the other side, as moving costs will likely exceed the value of the item!
3. Mortgage Doc Fees
If you find that after the sale of your home that you are now in a happy ‘mortgage-free position’. Then you will need to settle and cancel your mortgage. The costs of cancelling or ending a mortgage earlier vary but begin from $400. If are you are transferring your mortgage with the same provider to another property that you are buying, then there will be additional fees.
4. Auction fees
If you decide to auction your home, then an auction house will charge a fee for the service starting from around $1000. In some cases, your real estate agency (the one representing the sale of the home) will have its own in-house auctioneer service. This can often save you considerable costs or even be included within the agent's fees (which means you won't have to pay for it until the property is sold). It's always worth asking and negotiating this before you sign up with a real estate agency.
5. Reporting Costs - Pre-Purchase reports and Strata
There is no obligation for the seller to provide any type of pre-purchase reports such as pest, build and conveyancing. However, some homeowners may arrange these anyway in order to address issues before they come up. Pest and Building inspections vary according to provider and property size but start from around $300.
If you own a strata-titled property, then your agent may recommend that you pay for a strata report. This report details the range of considerations, including the amount in the sinking fund, past and planned maintenance and the financial health of the co-owned property. Whilst potential buyers can pay for this report themselves, some sellers provide pay for it themselves as it can be useful for the seller and real estate agent to address questions. Strata reports cost between $250-$350 and can be arranged by your property conveyance. Learn more about Strata and Strata reports by reading out 2 part blog What is the Strata Inspection Report here.
6. Capital gains tax
Sadly, the biggest and most unavoidable costs come in the form of the capital gains tax. Basically, tax on the increase in the capital of the home. The best way to look at this is that you are being taxed on your winnings, and therefore is a ‘good problem’ to have, however hard it might be to part with! The amount of capital gains tax you pay varies widely on your current situation and tax commitments. You will not be simply taxed on the original purchase price minus the sale price. Instead, you will include many other considerations such as costs of sale etc. Ultimately, it makes sense to minimise the tax you pay and the best way to do that is to speak to a tax accountant.
Some of the biggest costs of selling your home actually arrive after the day of settlement. As always, the key is to be aware of what costs are going to be due and when, and then budget and plan accordingly. To learn more about the costs of selling your home, including services such as professional styling your home before sale, read last weeks blog '5 Upfront Costs of Selling your Property'.
All information contained on this website is for your reference only. You should always make your own enquiries and seek independent legal advice in respect of any information about real estate law and the purchasing of real estate and related subjects. This website may contain hyperlinks to websites operated by parties other than PestBuildLegals. Such hyperlinks are provided for reference only. PestBuildLegals does not control such websites and is not responsible for their contents.