What is the cost of selling a house in 2021?
Most of us are aware that selling a house costs money. Sometimes we aren't aware of how much money selling a house really costs. Some costs are unavoidable, while others are voluntary. The question you need to ask yourself is whether those voluntary costs are worth paying for.
Unavoidable costs of selling a house
Arguably, you can try to sell your house yourself. This can backfire, though.
Real estate agents are professionals and know how to reach more buyers and fetch the best price for your home. Unless someone walks up to your door and offers you a ridiculous amount for your property, the cost of a real estate agent should be included in your list of unavoidable costs.
Unavoidable costs associated with selling a house can include:
- Your agent's commission
- Marketing fees
- Search costs
- Discharge of mortgage (in many instances)
- Rates and taxes after settlement
- Conveyancer's fees
- Moving costs
You may not have to pay all these costs, but you will have to pay most of them. One of your highest costs will be your agent's commission.
Understanding real estate commission rates
Real estate commission rates aren't regulated and are set by individual agents. This means they can vary from suburb to suburb, as well as between agents within a suburb. While the difference between 2.0% and 2.5% may seem small, take the time to work it out and the difference could be thousands of dollars or more.
There are two main types of commissions: fixed and tiered. Fixed commissions are the most common, and are calculated by multiplying the sale price by the commission rate. If your home sells for $400,000 you might pay:
- $8000 at a rate of 2 percent
- $12,000 at a 3 percent commission rate
- $13,000 at 3.25 percent
A tiered commission rate, on the other hand, is designed to get the most out of your real estate agent, and work for a higher sale price. How? By dangling the promise of a higher commission rate above a set sale price. This is also known as a "commission accelerator".
If you think you can get $830,000 for your home, you could agree on a rate of 2.0% for any price under $830,000 and a higher rate of 6% kicking in on any amount above $830,000.
Understanding stamp duty
If you're purchasing a property, you'll be up for stamp duty. Stamp duty can cost more than the commission you pay your real estate agent, but it depends on where you live. If you buy your home for $400,000, you might pay:
- Over $16,000 in Victoria or the Northern Territory
- $13,000 to $14,000 in New South Wales, Western Australia or Tasmania
- In Queensland, you might only pay $7200
Depending on your location, commission and stamp duty can cost between $15,000 to up to $29,000 for a $400,000 home. Add the other unavoidable costs to the equation and it becomes clear that you want to do your utmost best to get the highest possible price for your property.
Yes, you will pay a higher commission, but that is only a small percentage of your selling price, and using a qualified and experienced agent means you have a better chance of fetching a higher sales price.
Voluntary costs of selling a house
Voluntary costs are sometimes called "hidden costs." They're costs you don't think about when you put your house on the market. However, they're costs that can actually pay big dividends. So what are these voluntary or "hidden costs"?
- House cleaning - from $50/hr - is a pre-sale must for every home
- Repair anything that needs repairing
- Does your interior or exterior need painting?
- Renovations, such as bathroom or kitchen upgrades, can pay more than their cost when you sell your home - but be careful not to overcapitalise
- Garden maintenance: your street view is important and your backyard should be tidy
- Home staging is an increasing popular option
If your gutters are rusty and your fence is leaning over, buyers will notice. They will think you haven't maintained your home and may not even make an offer. If they do, it will be because they are looking for a renovator's bargain. Repairs don't cost a fortune, but can add tens of thousands of dollars to the value of your home.
Does your exterior need painting? If paint is chipping off, it may. If it's just dirty, a pressure cleaning service may be all you need. They will be much less expensive and you should consider having the service clean your driveway, patio and paverments while they're at it.
Inside, you may want to paint dark coloured walls a lighter colour to make your home feel larger and lighter. It can be a DIY project, but consider hiring a professional painter. This is especially true if you are time poor and not handy.
Expect to pay from $250-$400 per room. For exterior painting, expect to pay anywhere from $20 to $50 per square metre.
Read more: How to boost your home's street appeal
Renovating a kitchen and bathroom before selling
Kitchen renovations can be the most expensive, but pay the highest dividends. Buyers are looking for a clean, functioning kitchen they feel they can work in as soon as they move in.
If your kitchen is in decent condition, you can clean it and make any necessary repairs. However, if you need to renovate the kitchen, you don't have to pay for granite benchtops and European appliances. Opt for less expensive finishes and materials, like laminate which is hard wearing and easy to install.
There are also plenty of mid-range appliance brands which are reliable and have good customer service and plenty of spare parts on hand.
And don't overlook your bathroom, either. A bathroom renovation is one of the most effective ways to increase the value of your property. If you're looking for some cost saving cosmetic improvements, things like changing out a vanity and some fixtures can make the world of difference and not cost too much.
Be sure, however, to hire a professional handyman when choosing to repair your home before putting it on the market. Not only will they ensure the best possible results for your home and its prospective buyers, but they will also save you the stress of needing to it yourself. From painting and garderning through to floor polishing and cabinetry repairs, they've got you covered.
Garden touch-ups and curb appeal
The only buyers who will make an offer on a house that has an untidy streetscape are buyers looking for a cheap home to renovate. You can't expect to get the best price for your home if your front yard isn't presentable. Garden maintenance services aren't expensive, but a tidy garden or some landscaping can add $15,000 or more to the value of your home.
And don't forget your backyard. After a buyer walks into your home, they will inspect your backyard. You don't want them to see a lawn full of weeds or dead plants in your garden.
Home staging and styling - a cost that can be very cost-effective
Home staging (sometimes called home styling) is a relatively new phenomenon in Australia. A home stager is a professional who can come into your home and recommend ways to make it more presentable to the buying market.
You can also let them have free rein and do what it takes to make your home more attractive to buyers. While home staging costs money, it can add up to 10 percent to the value of your home. Expect to pay anywhere from $1,995 for six weeks of display for an apartment.
These "hidden" or voluntary costs are optional, but unlike the unavoidable costs, they can add tens of thousands of dollars to the sale price of your home. Think of them as investments in your future rather than expenses.
You will be glad you did when your investment in repairs and renovations increases the value of your home far beyond their costs.
Cost of selling a house in Australia: state-by-state guide
Now that we have covered all the costs you can expect to incur when selling a house, let’s take a look at what the ‘known’ costs are where you live.
The cost of selling a house in Australia varies on a local, suburb and state level. It also depends on what marketing costs you opt for, as well as how much you spend on sprucing up your property for sale.
Here is a sample of the average commissions and costs state-by-state, looking at urban and rural postcodes in each. Just bear in mind that these costs will vary locally and serve only as a guideline.
|State||Average Commission||Marketing costs||Auctioneer costs||Conveyancing Fees|
|NSW||2%||$600 - $10,000||$200 - $1000||$500 - $2200|
|Victoria||2%||$500 - $8000||$200 - $1000||$500 - $2200|
|Queensland||2.4%||$500 - $8000||$200 - $1000||$500 - $2200|
|South Australia||1.99%||$400 - $5000||$200 - $1000||$500 - $2200|
|Western Australia||2.4%||$500 - $6000||$200 - $1000||$500 - $2200|
|Tasmania||2.96%||$400 - $4000||$200 - $1000||$500 - $2200|
|ACT||2%||$600 - $10,000||$200 - $1000||$500 - $2200|
Calculate the average real estate commission in your area
You can use our real estate commission calculator to work out the average real estate commission in your area. We've collected the commissions from real estate agents right across Australia to work out the average commission rate for each suburb based on your expected sale price.
Just remember that commission rates vary from one agent to the next.