How Much Does It Cost to Sell A House

How Much Does It Cost to Sell A House? – Complete Guide

The article provides a comprehensive breakdown of the various costs involved in selling a house, helping homeowners budget effectively. It covers real estate agent fees, marketing expenses, legal costs, and potential taxes, ensuring a well-informed selling process.


 

Key Takeaways

  1. Real Estate Agent Commissions
  2. Conveyancing/Local Solicitor Fees
  3. Marketing Fees
  4. Mortgage Discharge & Break Fees:
  5. Capital Gains Tax
  6. Additional Fees

 

Since you’ve decided to sell your house, congratulations on this exciting new chapter! It brings the thrill of a fresh start and the satisfaction of a successful sale. But amidst the packing boxes and open houses, a crucial question pops up: How much does it cost to sell a house?

While there’s no single answer to this question, this guide will shed light on the different costs involved in selling a house, helping you estimate your bottom line.  

From real estate agent commission fees and conveyancing costs to marketing expenses and moving fees, there are many factors to consider when selling a house. By knowing these expenses, you can easily understand how to sell a house with more confidence and ensure a smooth and profitable transition.

Real Estate Agent Commissions

Selling your house involves partnering with a real estate agent to ensure a smooth and successful transaction. But how much does this partnership cost?  

There are three primary types of real estate agent fees: 

House Selling Agent Fees

  • Flat Fee: This is a set price agreed upon upfront, regardless of the final selling price of your property. It offers predictability in your costs. 
  • Percentage-of-Sale Fee (Commission): This is the most common structure, where the agent receives a percentage of the final selling price. The rate can vary from 1% to 3.5%, influenced by factors like property value and market competition.  
  • Bonuses: This is an increasingly popular option for sellers seeking exceptional results. You and your agent agree on a bonus percentage earned if the sale price exceeds a predetermined amount (reserve price).

Example: Understanding the Impact of Fees

Let’s consider a property expected to sell for $1 million. Here’s how the different fee structures impact the agent’s earnings:

  • 1.5% Commission + 10% Bonus: The agent earns a base fee of $15,000 (1.5% of $1 million) plus a bonus of $10,000 (10% of the $100,000 exceeding the reserve) for a total of $25,000 if they sell the property for $1.1 million.

Additional Considerations 

  • Auction Fees: If you choose to sell by auction, expect additional expenses of $500 to $1,500, which may be bundled with your agent’s fees or charged separately. 
  • Market Variations: Real estate fees can vary depending on your location, the agency you choose, and the agent’s experience and negotiation flexibility. Some agencies offer flat fees, while others have commission structures that increase with the selling price. 

Takeaway Message

  • Thoroughly discuss fees with your agent before signing contracts to understand their breakdown and any room for negotiation. 
  • Obtain quotes from multiple agents to gauge the fee landscape in your area and find a structure that fits your budget and expectations. 

Conveyancer/Local Solicitor Fees

This fee is part of the house-selling process due to a crucial step called conveyancing

Conveyancing refers to the legal process of transferring ownership from you to the new owner, handled by licensed conveyancers or local solicitors who conduct various checks and prepare legal documents. 

While both conveyancers and solicitors can handle conveyancing, it is recommended to go for a local solicitor because their local knowledge can be invaluable. They may identify potential issues arising from special conditions attached to the property, preventing complications down the line. 

Expect costs to range between $500 and $2,200 for conveyancing, as it depends on your location and the type of conveyancer’s fees. This also covers the legal fees associated with the conveyancer or solicitor’s services. 

 Marketing Fees 

When selling your house, generating buzz and attracting qualified buyers is an important process. This is where property marketing comes into play and here are some common marketing tools involved

  • High-Quality Photography 
  • Drone Photos and Footage 
  • Signage 
  • Compelling Property Description 
  • Real Estate Website Listings 
  • Video Tours 
  • Flyers and Pamphlets 
  • Press Advertising 

The total marketing cost will vary depending on your location, chosen strategy, and budget. Here are a few examples of a general range to consider: 

  • Melbourne Market Average (2023): $6,500 to $8,000 
  • Sydney Estimates: $4,500 to $10,000 

Don’t be discouraged by the numbers, as your real estate agent will be your partner in crafting a successful marketing plan. 

Mortgage Discharge Fees (Settlement Fees) & Break Fees 

These fees are charged by your lender when you close your home loan account, if any, upon selling your property. They apply to both fixed and variable rate mortgages. 

NOTE: If you’re on a fixed-rate mortgage and sell your house before the fixed term ends, you might incur a break fee. This fee compensates the lender for the potential loss of interest they would have earned if you had kept the loan for the full term. 

The amount you pay for mortgage discharge fees and break fees can vary depending on: 

  • Loan Size: Larger loans typically incur higher fees.
  • Fixed Term Length: Early exit on a longer fixed term usually leads to a higher break fee. 
  • Loan Conditions: Specific terms of your loan agreement may influence the fees. 

Altogether, expect mortgage discharge fees and break fees to fall within a range of $150 to $1,500. 

Discharge Process Timeline 

Your lender will have their own mortgage discharge forms that need to be completed. The entire discharge process typically takes between 2-3 weeks. 

Capital Gains Tax  

While you’re likely focused on the exciting aspects of selling your house, it’s crucial to consider potential tax implications, especially if you’ve owned your property for a significant period. Here’s why: 

  • Capital Gains Tax on Profits: When you sell your house for more than you purchased it for, the government may take a cut through capital gains tax. This tax applies to the profit you make on the sale, not the total selling price. 
  • Factors Affecting Your Tax Bill: Several factors influence your capital gains tax liability: 
  • Profit Amount: The larger your profit, the higher the potential tax burden. 
  • Filing Status: Filing jointly with a spouse can sometimes reduce your tax liability compared to filing individually. 
  • Occupancy and Ownership Duration: If you’re a primary resident of the home and have lived there for a significant period, expect to pay higher capital gains tax.  

You don’t have to panic; consulting a tax advisor as help analyse your specific situation and advise on strategies to minimise your tax burden.  

Additional fees 

While the above-listed fees are major factors, several additional expenses also come into play when selling the house. Here’s what is included: 

  • Home Improvement Fees 

65% of sellers invest an average of $5,400 on pre-listing improvements to make their homes more attractive to buyers. This can also increase your home’s cost basis, potentially reducing capital gains taxes. 

  • Home Staging Fees 

Professional home staging typically costs between $700 and $2,800. But the investment can pay off – staged homes often sell faster and for a higher price. Staged homes showcase the property’s potential and value to buyers. 

  • Pre-Inspection Fees 

A home inspector will inspect your home before you sell it, and the cost may vary based on the square footage, age of the house, and location, ranging somewhere between $350 and $500. A professional inspector can identify major issues and save you money on unnecessary fixes. 

  • Moving Fees 

Now that you’re selling your house, you’ll be moving to a new place, which involves some expenses. Moving expenses depend based on the distance and the belongings you need to transport. Local moves average $1,500, while long-distance typically reach $4,500 on average.  

Here’s a table summarising how much it costs to sell a house, including the various fees associated with each process: 

Process Fee Structure Average Cost Range Hidden Charges
Real Estate Agent Commission Flat Fee, Percentage (1%-3.5%), Bonus Varies depending on the structure Auction Fees ($500-$1,500)
Conveyancing/Solicitor Fees Varies $500 – $2,200
Marketing Fees Varies depending on the strategy Melbourne: $6,500-$8,000
Sydney: $4,500-$10,000
Mortgage Discharge & Break Fees Vary depending on Loan size, Terms & Conditions $150 – $1,500 Applicable only if you have a mortgage
Capital Gains Tax Vary depending on Profit, Filing Status & Occupancy
Home Improvement Varies Up to $5,400
Home Staging Varies $700 – $2,800
Pre-Inspection Varies $350 – $500
Moving Costs Varies depending on Location, Distance & Belongings Local: $1,500
Long Distance: $4,500

What’s Next?

  • Now that you understand how much it costs to sell a house, it’s time to connect with a local real estate agent who has in-depth knowledge of your market. They can effectively guide you toward a successful and profitable sale.  
  • Arrange interviews with multiple candidates to compare their marketing and sales approaches.  
  • Keep in mind that you’re the one paying the commission, so you have the authority to ask thorough questions to ensure you find the best fit for the task at hand.

Choose The Right Way with Wright Way Realty 

At Wright Way Realty, we’re committed to delivering exceptional service with our team of professional and experienced real estate agents. Whether you’re in the market to buy or sell, we’re here to provide expert advice tailored to your needs.  

With our deep understanding of the Jervis bay Real estate market dynamics, we’ll ensure a smooth and successful transaction. When you choose Wright Way Realty, you’re choosing excellence and reliability every step of the way.