Successfully selling a home requires investment in the right areas, with expenses including pre-sale preparation, marketing, legal fees and the agent’s commission. The home’s presentation is what generates inquiries and increases competition. The more activity the property is getting leads to a larger pool of active buyers and better results.
Remember that a number of costs are negotiable, including commissions.
Spring cleaning is always a good place to start. Clean up the garden, mow and trim the lawn. Your house may also need some fresh paint. Sometimes you’ll need to spray the roof, and there is also general maintenance of the property.
Consider which renovations will deliver value. For example, sometimes renovating the kitchen isn’t the most urgent thing to do.
Sellers invest a lot of time searching real estate agents and tailoring their marketing. This is important for getting buyers, but it isn’t very reassuring when buyers come through the door and the property isn’t presented well.
Professionally styling your property might cost around $4,000 for your average three-bedroom property, however, the extra effort is likely to translate to a better result at the end of the sale.
The cost of marketing ranges between $5,000 and $8,000, as property owners want to showcase their properties in the best light possible to attract the most buyers.
In most cases, you’ll want to include professional photography, floor plans, advertising copy, a signboard and premium online advertising packages.
Investment levels can vary according to the type of property and the buyer demographic.
There are many ways you can advertise your property. Ads in print reach a broader audience, while high-tech methods work for some homes. Just remember to go broad and get marketing in a variety of formats.
Changes to buyer behaviour have influenced the way properties are advertised. Today, professional videos are popular – they cost about $450 to $600, depending on their length.
A simple walkthrough video of the property can cost about $200, and they have proved to be vital during the pandemic as people can only buy through videos. Properties with a fantastic view, beach proximity, or massive land size do well with drone photography.
Owners seeking to minimise costs may be tempted to forego non-essential activities. For example, for properties not located on main roads or busy thoroughfares, the owners might not see the value in using a large signboard.
Skimping on the signboard can save about $400. Weigh this up against potentially delaying the sale by an additional two months due to lack of interest.
In the legal department, conveyancing services start between $1,500 and $2,000. Conveyancing includes preparing the contract, dealing with potential buyers’ legal representatives during the campaign, and settling the property.
Homeowners with mortgages should also expect to pay between $300 and $400 in discharge fees.
You can expect an auctioneer’s fee of about $1,000 for properties sold at auction. However, we can avoid this fee if the agency has an in-house auctioneer.
Following preparation and marketing, the vendor must pay their agent’s commission from the sale proceeds.
The commission rate should be negotiated as part of the agent interview process. With commissions, the entire conversation is negotiable.
Different agencies and agents use other commission structures. Generally, it depends on their expertise or market share.
As a rule of thumb, expect the commission to range between 1 and 2 per cent of the sale price inclusive of GST.
The commission structure does not need to be flat, and vendors can reward agents with higher commissions for a higher price.
For example, sales up to $1 million, you might pay 1.25 per cent, then from $1 million to $1.1 million, 1.5 per cent. You could even offer a 10 per cent incentive for sales over a specific figure.
Remember: cheap rarely means best. Instead, go with the agent you feel will get the best results.
The capital gains tax depends on the property and the owner’s situation.
The costs we’ve outlined might seem like a lot to you, but these should be compared with the cost of not selling.