When deciding to sell, owners are often focused more on the possible money coming in rather than what’s going out. However, there are usually a number of costs when selling a house that should be considered beforehand.
Between last-minute fixes, advertising costs, and real estate agent fees, the cost of getting your house on the market can quickly add up. To help prepare you, we’ve put together a list of costs you should consider when deciding to sell your home.
Marketing & Advertising Costs
Marketing to potential buyers is critical. You know its best features, but buyers will need to have their imagination captured. To get as much interest in your home as possible, it’s wise to have a finely tuned and targeted marketing plan that should include featuring professional photography.
Professional Photography
Very good real estate photography can be the difference between attracting the ‘right’ interested buyers to your property, or the bargain hunters. We personally work with several top real estate photographers and can guide you on which one will be the right fit for your property.
The options and costs of professional photography, floor plans, and virtual tours are usually outlined in the marketing plan. A few different marketing plans are usually offered to sellers, leaving you the choice of deciding which approach best suits your goals and your budget.
Agency Listing Fees
One of the largest costs when selling a house is the real estate agents costs. You should only ever pay these agency commission costs if and when they sell your property at a price you agree to sell at.
The amount of commission is generally negotiable with some agents and is usually a percentage of the sale price or it can be an agreed fixed amount regardless of the selling price. Details of the agent’s commission fees and how it is calculated are found in the agency agreement and often also in the property appraisal.
The fee is generally paid out of the deposit that the buyer pays your agent when the sale and purchase agreement is signed, and the remainder goes to you.
The deposit must be paid into a trust account for at least 10 working days before being released. If the buyer’s deposit does not cover the amount of the commission, you will need to pay the difference to the agency.
Last-Minute Building Tidy-Up Work
Set aside a budget for doing the little fixes that are able to be done before any open homes to make the house more attractive.
Freshening paintwork, fixing anything that’s broken, and getting rid of scratches and dents are things you should turn your attention to. We can definitely help you decide beforehand, which fixes are likely to improve the value of the property.
Land Information Memorandum (LIM)
A LIM (Land Information Memorandum) report provides a summary of the current property information held by the different departments at the council on the day the LIM is produced.
If the LIM report uncovers work that needs to be done, you should ask yourself whether you have the resources to complete the work or whether you want to sell the property as-is with full disclosure. Making a recent LIM report available to buyers can help them make decisions around their offering, and can also give you peace of mind that there shouldn’t be any unforeseen problems due to records the Council holds on the property.
The costs to get one can vary from council to council but are generally around two to four hundred dollars.
Cross Lease Titles
If you have a cross-lease title, from time to time the flats plan that accompanies the title can be defective. This will usually happen when alterations to your property’s footprint (plan) have not been included in the flats plan.
Additions and major alterations may very well be consented, however, the Title also needs to be adjusted to reflect any such changes, otherwise, this can render the Title defective, which in turn, may kill any pending sales agreement.
Fixing this issue can be expensive and it is worth getting a copy of your title and either talking with us or if there is a problem with the Title, seeking legal advice before listing your property if you think your flats plan might be out of date.
Builders or Specialists Reports
Some sellers may consider getting a builder or specialists report done to accompany a LIM report, to help reassure buyers and make the sale process run more smoothly. This isn’t always something we would recommend as it can come back on a property owner if the building inspector fails to identify a fundamental issue with the property.
The best idea is to leave any building inspection up to the buyer to include as one of their purchase conditions. As with a LIM report, a property inspection report may reveal work that needs to be done, so in addition to paying for an inspection, you may need to cover the cost of repairs.
Occasionally buyers may use an adverse building report to try and further negotiate a price reduction post-agreement.
Home Staging
When selling a property first impressions do count, so before getting professional photography done, talk to us about what needs to be done to present it at its best.
Home staging can be carried out by you and can be as simple as de-personalizing, decluttering, or just re-arranging the furniture layout to create more space.
Displaying on-trend cushions, throws, wall prints, and fresh flowers can make your property more inviting to buyers. While it’s often not as expensive as carrying out building work, the cost of freshening up your home can add up.
If you are decluttering as part of your home staging but don’t wish to get rid of your treasures, you might need to hire a storage unit while your property is being marketed, or if possible and you have spare garage space, store the items in there in big cardboard boxes.
For unoccupied or empty properties, to save you having to buy brand new furniture, engaging a professional home staging company may be something worth considering. We have a number of home staging companies we deal with who all do a great job at various budget levels.
It’s worth doing your research and gathering quotes from several well-regarded home staging companies.
Cleaning Costs
Before you engage a home staging company or get the photographer around, you’ll want to ensure your property is as clean as possible. This applies to the inside as well as the outside
You will want your house to be at its best for buyers at viewings and open homes, and at settlement. You may wish to carry out a deep clean yourself but employing a cleaner or cleaning company to get your house sparkling may be worth considering.
Spend some time researching cleaners and gather local recommendations and quotes and make sure that you clearly explain what needs to be done. As you go about your everyday cleaning routine, it’s easy to overlook up-high dusting and making sure skirting boards are free of grime.
Likewise outside, you should have the house cleaned of any dirt or mould, ensure the gutters are free of clogged leaves (and growing plants). Make sure the paths, decks, and driveways have been water blasted and cleaned to remove algae, mould and lichen.
Moving & Packing Costs
If the property you are selling is your current home, it pays to think ahead if you may be thinking of hiring a moving company to do the heavy lifting and shifting of your possessions to your new home. Asking around, reading online reviews, and comparing quotes is a good way to help you work out which option is best for you.
Moving Services
Whenever you move into a new place, there are often a few costs that can be overlooked, such as charges for setting up your internet connection or landline, power, and gas.
It can often be more straightforward to stay with your existing supplier, but it’s worth contacting them in advance to ask what the set-up costs will be and or check whether another provider may cover your transfer costs if you move to them.
Lawyers or Conveyancing Fees
If you don’t have a lawyer or haven’t used one in a long time, we recommend you ask around and find one to help you through the selling process. Conveyancing lawyers and registered conveyancers can carry out property transactions (also referred to as ‘conveyancing’).
Choose a lawyer or a conveyancer based on your budget and the complexity of the sale transaction. They can often provide you with good advice prior to signing any sales agreement if there are any tricky clauses in the agreement.
Auctioneer Services
Another one of the often unexpected costs when selling a house is when you’re planning to sell your house at auction.
You should be aware that there may be additional fees to pay beyond the real estate agent fees. Talk to us about selling by auction as we can explain to you what additional auctioneer fees may apply.
Also, a strong marketing plan is important when selling via auction – you want to make sure there are enough genuine bidders in the room on auction day.
Auctions can also be quite a stressful process on sellers as they are usually quite short (3 weeks) campaigns and will usually involve a number of Open Homes and regular meetings with the agent. On Auction day, it can also be quite stressful with respect to making quick decisions on the day.
Auctions are great for ensuring your home is sold on the day. If the hammer falls, and the auctioneer announces ‘sold’, you have an unconditional agreement to sell the home. This method isn’t suitable for every seller, and we can definitely help you and guide you as to whether this is the most practical option for you and your property.
Finance & Mortgages
If you are buying and selling in the same market, and there is a difference in value either way between what you’re selling and what you’re buying, and there are mortgages involved, it would pay to talk to your bank beforehand to ensure you are approved for any additional borrowing, or to be aware of any penalty interest charges and bank costs for reducing or settling your mortgage.
Sometimes a good mortgage broker can help save you several thousand dollars as of part of the financing process. Ask us about who we can recommend.
Body Corporate Fees
If you’re selling a property that is on a Unit Title, chances are its also a part of a Body Corporate. You need to make sure you’ve set aside enough money to pay for any Body Corporate levies, repair costs and the long-term maintenance costs fund up until the day you settle.
Rates and Insurance
It’s critically important to keep your home insured until settlement day arrives. Once you have accepted an offer on your property, it’s wise to contact your insurer to let them know your plans.
It’s possible you may need to bridge your insurance across two properties if there is a gap between the settlement date on your current home and your new home. Your insurer should be able to answer any questions you may have.
It’s also good practice to make sure your property’s Council rates payments and any other outstanding utility charges are up to date before you settle. Also, if you have taken advantage of any Council funded Insulation grant that you pay back in your rates, this amount will also need to be fully settled on settlement day.
Before you list your house for sale, it’s important that you take a moment to weigh up all the potential costs involved. Having a realistic mindset will mean there’s less chance of any nasty surprises.
Excerpts included in this post were sourced from Settled.govt.nz