No Hidden Fees – Know Your Property Selling Costs
Planning to sell your property? Don’t want to be surprised about hidden fees? Know your property selling costs.
The major selling costs described below are split into three key categories: Agent Fees, Marketing Fees, and Other Fees.
Agent Fees
The first set of property selling costs are agent fees. When selling your property with a real estate agent or agency, a commission or agent fee will be charged for selling your property. These fees are generally charged once the property has been sold. There are three main methods for calculating this fee:
Agent Fee as a Percentage Fee
This is the most common method for calculating agent fees. This fee is calculated as a percentage of the sale price of the property. This means, the higher the sale price, the more agent fees you would expect to pay.
The percentage should be discussed prior to signing an authority to sell your home. Always check to see if the percentage includes or excludes GST.
Agent Fee as a Flat Fee
This fee is unrelated to the sale price of the property. If a flat fee is agreed upon, this agreed amount is the amount you would expect to pay, regardless of the sale price of the property. This means, if your property was sold at a price lower or higher than expected price, you would pay the same amount. This can be both beneficial or detrimental depending on the sale price figure.
The flat fee should be discussed prior to signing an authority to sell your home. Always check to see if the fee includes or excludes GST.
Agent Fee as a Tiered Percentage Fee (or Sliding Scale)
This is fee calculation method is not used often. A sliding scale is calculated as a percentage of the sale price, but the percentage is not fixed. Different price brackets will correlate to a different percentage fee. For example, selling past a certain price will reward the agent/agency with a higher percentage fee.
The tiered percentage fee should be discussed prior to signing an authority to sell your home. Always check to see if the fee includes or excludes GST.
Marketing Fees
The second set of property selling costs are marketing fees. Marketing fees are fees incurred to list or sell a property. Generally, a set marketing package will be offered by the agent or agency. Some agents may require a payment of the marketing fees upfront – prior to listing the property.
Marketing fees could include, but is not limited to, signboards, online site listing, social media listing, photography, videography, flyers/brochures, letter drops, floor plans, home staging, and auctioneer/auction fees. Three key marketing fees are explained below:
Advertising Fee
Advertising fee refers to the fees incurred due to listing the property on online sites such as realestate.com.au and domain.com.au. While you can pay for other forms of advertising, such as website ads or social media boosting, realestate.com.au and domain.com.au are the two most common platforms for real estate listings.
Advertising fee can make up a bulk of your marketing fee when listing your property as a high-tier property. By listing your property as a high-tier property, it can boost the property to the top of the page (or above lower ranked properties) to increase online traffic/viewership for the property. While there are general or standard listings for a cheaper cost, this will often be detrimental to online traffic/viewership, especially within suburbs with high property stock.
Home Staging Fee
While this fee is only relevant for vacant properties, when used correctly, home-staging can visibly improve the look of a property by leaps. By using ideal colour schemes and/or furniture combinations, the home-staging can help bring out a property’s full potential and entice buyers.
Home-staging costs will depend on the requirements in furniture and the size of the property. Vacant properties do not all require home-staging, but it is a cost to consider if you want to maximise the potential of your home.
Auction/Auctioneer Fee
You are expected to pay Auction/Auctioneer fees if you list for property for sale via auction. The fee can include the hiring fee for the auctioneer, online auction service fees and other auction service fees required during the process of auction the property.
Selling your property via auction is a great strategy within areas with high property demand or for when you need to quickly sell your home. Properties for auction can be sold pre-auction (early sale before auction date), at auction (sale during the auction on auction date), or post-auction (negotiated after auction when the sale isn’t achieved under the hammer).
Other Property Selling Costs – Other Fees
The third and last set of property selling costs include all other fees. Other fees to consider when selling your home:
Conveyancing Fees
Conveyancing or Solicitor Fees are fees charged by a conveyancer or solicitor to help with the process of transferring the legal ownership of a property once a property has been sold.
Property owners should consider choosing a trustworthy conveyancer and solicitor. From preparing Contract of Sales, to ensuring all the legal documents are gather, to formalising the legal process of the transfer of ownership upon settlement, your conveyancer or solicitor will be helping and working with you throughout the entire selling process.
If you don’t know any conveyancers or solicitors, you can always check for referrals from the agent / agency.
Lender Fees
Lender fees are fees charged by the lender to exit a loan early. Lender fees may be applicable if a mortgage still present when you sell your property.
In the scenario where you have accepted an offer from a buyer, you will be required to go to your lender and go through a discharge process. This may involve completing discharge paperwork, which will release you from the mortgage and allow you to get a hold a back of your title.
If you are using a mortgage broker, they will be able to help you go through this process.
Government Tax
When you sell an investment property, your property can incur a capital gain or a capital loss.
In most scenarios, a property is sold with a capital gain, that is, the proceed from selling the property is greater than the costs involved. Any capital gain is subject to a tax known as Capital Gain Tax. Your accountant will be able to help you determine your net capital gain for the financial year. You can also check out how to complete the calculations here: ATO: CGT when selling your rental property.
When you complete a tax lodgment for the financial year, you will need to include your net capital gain. This net capital gain will incur a Capital Gain Tax.
Still need more information?
Have a chat with Our Team for selling advice.
Last updated: 23 August 2023