How much can you expect to spend when selling your home?
Most of us are aware that selling a house costs money. Sometimes we aren't mindful of how much money the sale of a home requires. Some costs are unavoidable, while others are voluntary. The question you need to ask yourself is whether those optional costs are worth paying for.
Without sounding trite, the answer to this could be summed up with that frustrating yet often accurate phrase: how long is a piece of string?!
The cost to sell property can vary depending on how budget-savvy you are, and how much you are prepared to do yourself. In this article, we will look at the cost of selling a hypothetical $600,000 home. Naturally, if your home is worth more or less, you can calculate based on your home value, but most of the scenarios below are fixed fee rates (regardless of the value of your home), which makes it more accessible.
Unavoidable costs of selling a house - Engaging an Agent
Arguably, you can try to sell your house. This can backfire, though.
Real estate agents are professionals and know how to reach more buyers and fetch the best price for your home. Unless someone walks up to your door and offers you a ridiculous amount for your property, the cost of a real estate agent should be included in your list of unavoidable expenses.
With this in mind, there are some "ballpark figures" I can come up with, to give you a guide as to how much it may cost you to build a property.
Real estate commission rates aren't regulated and are set by individual agents. This means they can vary from suburb to suburb, as well as between agents within a suburb. While the difference between 2.0% and 2.5% may seem small, take the time to work it out, and the difference could be thousands of dollars or more.
There are two main types of commissions: fixed and tiered. Fixed commissions are the most common, and are calculated by multiplying the sale price by the commission rate. If your home sells for $400,000 you might pay:
- $8000 at a rate of 2 per cent
- $12,000 at a 3 per cent commission rate
- $13,000 at 3.25 per cent
For a very high-end home with custom-designed finishes and tailored design, you can expect to pay much more—anything from $1500-$3000 per square metre and up.
A tiered commission rate, on the other hand, is designed to get the most out of your real estate agent and work for a higher sale price. How? By dangling the promise of a higher commission rate above a set sale price. This is also known as a "commission accelerator".
If you think you can get $830,000 for your home, you could agree on a rate of 2.0% for any price under $830,000 and a higher rate of 6% kicking in on any amount above $830,000.
Voluntary costs of selling a house
Optional fees are sometimes called "hidden costs." They're costs you don't think about when you put your home on the market. However, they're costs that can actually pay big dividends. So what are these voluntary or "hidden costs"?
Or when the builder starts digging your foundations they realise they have to dig down further to hit firm footings, which will eventually require more concrete to be poured.
At times like this, you'll need to pay an additional sum on top of the initial contract price, as the allowance that had been provided has been exceeded.
Note: It is always a good idea to budget for around 10% of the total build price to allow for fluctuations in provisional sum prices.
If your gutters are rusty and your fence is leaning over, buyers will notice. They will think you haven't maintained your home and may not even make an offer. If they do, it will be because they are looking for a renovator's bargain. Repairs don't cost a fortune but can add tens of thousands of dollars to the value of your home.
Note: these items generally only change due to your change in preferences, so this could be an opportunity to trim costs if you opt for basic or standard fixtures, fittings and finishes.
Renovating a kitchen and bathroom before selling
Kitchen renovations can be the most expensive but pay the highest dividends. Buyers are looking for a clean, functioning kitchen they feel they can work in as soon as they move in.
Some of the typical expenses involved in a site cost can be:
- Connections to services such as water, sewer, electricity and gas
- Retaining walls
- Site clearance (trees, roots, bushes)
- Site survey
- Soil tests
Be sure, however, to hire a professional handyman when choosing to repair your home before putting it on the market. Not only will they ensure the best possible results for your home and its prospective buyers, but they will also save you the stress of needing to it yourself.
From painting and gardening through to floor polishing and cabinetry repairs, they've got you covered.
- Roof: depending on the materials you choose for your ceilings, such as tiles or colorbond, this can vary widely
- Tiling: an allowance for a tiling amount per sqm will be made, but this can change depending on the quality and size of your final choice.
The only buyers who will make an offer on a house that has an untidy streetscape are buyers looking for a cheap home to renovate. You can't expect to get the best price for your home if your front yard isn't presentable. Garden maintenance services aren't expensive, but a tidy garden or some landscaping can add $15,000 or more to the value of your home.
Fixtures and fittings: fancy, nonstandard taps and European appliances will cost more than standard Australian-made fixtures and fittings. Additionally, labour costs may increase if you select items that are more complicated to install. Inclusions such as fully ducted air conditioning can cost up to $10,000 (more for two-storey home).
And don't forget your backyard. After a buyer walks into your home, they will inspect your deck. You don't want them to see a lawn full of weeds or dead plants in your garden.
Home staging and styling - a cost that can be very cost-effective
Home staging (sometimes called home styling) is a relatively new phenomenon in Australia. A home stager is a professional who can come into your home and recommend ways to make it more presentable to the buying market.
The Extra Costs
Some additional charges you need to take into account and which could end up costing you a significant amount of money include:
These "hidden" or voluntary costs are optional, but unlike the unavoidable expenses, they can add tens of thousands of dollars to the sale price of your home. Think of them as investments in your future rather than expenses.
You will be glad you did when your investment in repairs and renovations increases the value of your home far beyond their costs.
Soil Quality –One of the first things your engineers will organise is a soil test. They do this by drilling some boreholes, and the best classification you can get is M classification soil. If your soil is more difficult to work with eg. Clay, Sand or Rock then you're likely to have to pay extra.
The slope of the block– The most accessible site to build on is a flat block. If your block slopes you're likely to have to pay extra for more foundations or to cut and fill the site (make it flat) and possibly for retaining walls.
Flood prone areas – some sites require the house to be raised with the floor level above natural ground level to cope with excessive rain or floods, and this can add to the construction cost.
In conclusion, the cost of selling a home in Australia varies on a local, suburb and state level. It also depends on what marketing costs you opt for, as well as how much you spend on sprucing up your property for sale.