Budgeting for selling your home is more difficult than it sounds. It's easy to be bamboozled by the headline price, but if your house sells for $500,000, you won't actually get $500,000. Some costs will be taken out of the cash sum (and of course, there's your mortgage to pay off), while there are other costs that you'll have to defray yourself.
Some costs are fixed; for instance, the cost of bank transfers will be a set amount. Some, like your conveyancing fee, can be negotiated a little; you'll want to get a couple of quotes. Some costs will be set as a percentage of the selling price, and others are fully discretionary—that is, you can decide exactly how much you want to spend. Others, like staging and removals, usually depend on the size of the property—how many rooms, and how large the property is.
That's a fairly confusing set of different costs and calculations. There's just one thing you can be sure of; it will be expensive!
It's always difficult to answer these "how-long-is-a-ball-of-string" questions, but research suggests that the average cost of selling a home breaks down like this:
That's quite a big range. It will depend, to some extent, on where you live; for instance, in South Australia you'll pay 1.99% average commission to an agent, while in Tasmania it's 2.96%. It can also depend on how you market the house. While marketing fees are generally similar across Australia, they're lower in Tasmania ($400-2,000 against up to $5,000 or even more elsewhere) but of course, that partly reflects the higher agency commission. Some agencies now have lower commissions, but take a higher bonus for selling above an agreed reserve price.
As you can see, the cost of selling your home is not small change.
Watch out for little extras. For instance, if you have an existing mortgage, there will be a fee for the discharge of the mortgage. You probably didn't notice it when you signed, but it will be there, somewhere, in the small print. Some marketing fees will be included in your estate agent's commission, but other costs may be extra; that's something you'll need to consider when you are choosing your agent. Some agents get business with a low headline cost but then charge a lot more for additional marketing. Of course, you could elect not to use an agent—in which case you'll want to read our post on The Pros and Cons of Sale by Owner.
Costs You Can Cut - and Costs You Can't
Some of these costs are under your control, but cutting them down to the bare minimum could have an impact on the speed of your sale and the price you achieve. For instance, you might cut out house cleaning and staging costs by doing the cleaning yourself, and just tinkering a bit with the layout of your furniture. Professional house cleaning can cost $50 an hour, so there's a saving you can make here. The same goes for little touch-ups to the garden and interior paintwork. But staging is an expert job, and if you don't stage the house correctly for its price level and neighbourhood, offers might come in quite a bit lower than the price you'd hoped to get.
You might decide to cut agents' costs, too. Again, that might have an impact on the marketing of your house, so you need to be sure that you're not making a false economy. But you might head to Upside, which only charges a $1,900 flat fee instead of a commission.
Moreover, you could cut your removal costs by doing it yourself, particularly if you don't have much to move, or if you have a friend with a van. If you're selling up to move abroad, you might even decide to move out with just two suitcases—the cheapest way to go! But the job of moving a family out of one home and into another, with the children's toys, all your clothes, furniture, kitchen equipment and the dog, is immeasurably easier if you have a professional removals team helping you. $1,000 or so isn't much to pay for a smooth move and peace of mind.
One Cost that's Often Forgotten
The majority of home sales involve a move to another property, with both settlements on the same day. That gives you a seamless home move. But sometimes, you may need to complete the purchase of your new home before the sale of your old home is settled. In that case, you'll need to add the cost of a bridging loan to your calculations. Alternatively, you could avoid the stress of that path by using Sellable, who will buy your house for a guaranteed price upfront and then share any profit on the resale with you—giving you certainty and peace of mind.