There’s a myriad of costs to vendors when selling a house.
From conveyancing costs to agent’s fees and bonuses to marketing expenses, there’s lots to consider.
Campbell Cooney, director and auctioneer at Hodges, one of Melbourne’s oldest real estate agencies, says vendors need to be aware of the costs involved in selling before they put their home on the market.
“The three main costs are conveyancing, marketing and the agent’s fee or commission,” he says.
“When it comes to choosing an agent, a vendor’s decision should never be based purely on the costs placed in front of them,” Cooney says.
“As a vendor, you need the best candidate to look out for you in the sale, as they represent you.”
Conveyancing is the process of transferring legal ownership of a property from one person to another and is required in every real estate purchase. It can be done by licensed conveyancers and solicitors.
“We recommend vendors use a local solicitor, as they tend to have local knowledge and are able to recognise if something, like a special condition, might be an issue,” Cooney says.
Vendors should budget for $800 to $1300 for conveyancing.
The vendor covers the cost of marketing their property.
“An agent will recommend a marketing campaign, which might include a board out the front of the house, listing on realestate.com.au, photography for the listing, the creation of a floor plan, copy-writing and press advertising,” Cooney says.
Each listing is unique, Cooney says, and depending on budget, campaigns are adjusted.
The average marketing campaign in the Melbourne market costs between $6500 and $8000.
In Sydney the cost of selling can range between $4500 to $10,000, depending on the property and the advertising schedule, according to Michael Minogue from Laing + Simmons in Woollahra.
There are two types of real estate agent fees, Cooney explains. “There’s a flat fee, where the agent and vendor agree on a fixed fee for the sale of the property, and no matter what it sells for, the fee is set. Then there’s a ‘percentage of sale’ fee, where the agent gets a certain percentage of the final sale price,” he says.
The percentage fee can range from 1% to 3%, but is influenced by a number of factors, such as the property value and the competition for business among agents.
Bonuses are also increasingly being used, he says. “These are effectively incentive bonuses, where the agent and vendor agree on a percentage-based bonus if the property makes above the agreed reserve. It may be, say, 10% of the amount above the reserve,” Cooney explains.
For example, a property expected to sell for $1 million, being sold by an agent on a 1.5% ‘percentage of sale’ fee and 10% ‘bonus’ fee, that goes for $1.1 million, nets the agent $25,000. This is made up of $15,000 for the percentage fee (1.5% of $1 million) plus a bonus $10,000 (10% of the $100,000 above reserve).
All fees should be discussed with the agent before signing.
To maximise sale price, many agents recommend professional styling and basic maintenance around the property.
“When a potential buyer walks into a house, they’re thinking to themselves ‘do I love it?’, ‘could I live here?’ and styling is about making the property as appealing as possible, to show off the space and make sure it feels good,” Cooney says.
The cost of styling can range from as much as $6000 to fill and style an empty property, to very little, with good agents offering free advice about ways to declutter a home and make it look great, Cooney says.
“It doesn’t need to be expensive, but it can make all the difference,” he says.
“Trimming a bush, clearing clutter from a kids’ room, putting junk in storage, borrowing some nice outdoor furniture from a friend to dress a deck … these are all quick and easy and have a big impact.”
Most agents will also recommend completing jobs around the home to improve it for sale.
“Your first question has to be, who are we selling to? If it’s a family home and there’s a rotting window, it needs to be replaced, but if it’s an older house being marketed as a renovator’s delight, you wouldn’t go spending money on weatherboards,” Cooney says.
Such jobs can vary in price, depending on complexity.
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