You could make big bucks from the sale of your home, but it won’t come cheap.
As the old adage goes, you have to spend money to make money – and in the world of real estate, this certainly rings true.
But just how much will you really be up for when you put your home on the market?
AGENT, MARKETING AND LEGAL
Ray White head of Performance and Recognition Bianca Denham says there are essentially three main costs when it comes to selling a home: the agent’s commission, marketing costs and legal costs.
In Australia and New Zealand, real estate agents generally set their sales commission within the range of about 2-3.5 per cent, she says, though this can sometimes vary.
Agent fees usually sit somewhere between 2-3.5 per cent. Picture: NCA NewsWire / David Swift
“If I was selling a house for $1 million based on those numbers that would be somewhere between $20,000-$35,000,” she says.
Considered a “success fee”, the commission doesn’t get paid until the house is sold.
Marketing fees, on the other hand, are usually required to be paid upfront, she says.
“The marketing fee is an area for vendors to be wary of,” she adds.
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While some agencies offer to cover the cost of marketing, Denham cautions against this, explaining vendors might not get the best service under such an arrangement.
Marketing is usually provided by a third party, the cost of which is usually itemised and passed on to the vendor. By doing this, the vendor can see the value they have paid for.
Ray White head of performance and recognition Bianca Denham. Picture: supplied
“The price of the marketing is very area dependent because the portals will be priced on a click per view type of model,” she says. “If it’s a very heavily searched suburb, the portal price will be more expensive than a suburb that doesn’t have many clicks.”
“Generally the ranges around Australia and New Zealand will be from anywhere as low as maybe a couple of thousand dollars through to possibly $10-$15,000 or $20,000, depending on the property.”
Legal fees can be anywhere from $2000-$5000 depending on state-based requirements, she says.
Repainting the house might be worth doing to maximise the sales result.
EXTRA COSTS TO CONSIDER
Another expense that many sellers don’t think about is the cost of prepping their home for sale, says founder and managing director of Horwood Nolan Ben Horwood.
“The big one that most people spend the majority of their money on would be prep,” he says.
In Sydney’s inner west where he sells homes in the $3-4m range, vendors generally spend about $30,000-$50,000 getting their homes prepared for sale, doing things such as house washing, painting, window furnishing, floor covering and landscaping.
“Paint, landscaping and styling would be the top three that would make the most difference,” he says. “It can be 10-20 per cent of the value of the property.”
Designer Justine Wilson.
Director and principal stylist of Vault interiors Justine Wilson says the cost of staging a home can vary greatly across companies but is also dependent on the size of the home and style of the property.
The average partial style usually costs between $4000 and $8000 for a small home, which is a similar price to a full style, she says.
“A partial style isn’t necessarily always the cheaper option,” she says. “Quite often we’re quoting on removing and storing some of the owner’s items or the vendor may be looking at their own removal and storage facility, so they’re effectively paying double handling. Logistically there’s more labour and time.”
The cost of listing your home on a web portal varies depending on your suburb.
VALUE FOR MONEY
To get the best value for money, it’s important to choose your selling agent wisely, says Horwood.
“The number one thing you should be spending your money on is choosing a quality agent that’s going to give you good advice around what to spend money on and what not to spend money on,” he says.
In fact, by going with a low cost agent who promises a high price, it could cost you more.
“A lot of the time that can lead to extended times on the market because the property is priced too high and not prepared effectively and then it usually ends up costing them a lot more than the difference in the fees for an agent that’s going to give them quality advice and get it right the first time,” he said. “It’s a very, very, very expensive mistake to make.”
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