Real Estate
Selling Costs
Agent Commissions
It is possible to sell a house without the assistance of a real estate agent, and kits
are available which will take you through the process. However, for most people,
and certainly expatriates who don't have the advantage of being in the country,
agency fees are a fact of life and the single largest cost of selling a house.
Commissions are unregulated and are entirely a matter of negotiation between
you and the agent – however they typically range from 2% to 3%, and may be
higher for low value properties and lower for expensive houses.
In theory, you should interview a number of agents regarding the sale of your
house with the level of commission an important consideration. From an
expatriates point of view, unless you can schedule home leave at the appropriate
time or your partner is available to return to Australia, this approach is hard to
achieve. Note that discussions around commission should go hand in hand with
discussions regarding any marketing plan and specifically any advertising costs
that the agent would like you to pay for.
Advertising Costs
If you are auctioning your property you will almost certainly be asked to pay for
the advertising costs – these can be substantial, anything from $1,000 for a
modest house to much more than $10,000 for a very expensive house. Agents
view advertising as an essential part of the marketing campaign. Many will argue
that it is unwise to skimp on advertising because it is an innate part of whipping
up interest prior to an auction. You should test this desire to spend your money
on advertising by linking it with agency commission costs and other selling costs
in any appointment discussion.
You may also be asked to contribute to marketing costs if selling by private treaty – whether it is appropriate will depend on your particular circumstances – and
again it should be considered as part of the total selling costs.
Vendor Stamp Duty – NSW
In July, 2004 the State Government of NSW introduced a new stamp duty
payable by a vendor in addition to that normally paid by the purchaser. It is
levied at the rate of "2.25% of the dutiable value of the land related property";
normally this is the selling value.
However, in order for any duty to be payable the value of the property sold must
exceed the acquisition cost by 12% - "discounts" from the level of duty apply if
the increase is:
- More than 12% but less than 13% - discount of 75%
- More than 13% but less than 14% - discount of 50%
- More than 14% but less than 15% - discount of 25%
Obviously, there is no liability for vendor stamp duty if the property is sold at a
loss. Note that the stamp duty paid will decrease the amount of any capital gain
made on the property and hence any CGT payable to the Federal Government.
This is touted as an "incidental benefit"!
Note : this stamp duty is not payable on an individual or family's "principal place
of residence" – the focus is on taxing investment properties.
Stop Press : The NSW Government announced the abolition of the above vendor tax effective August 2nd, 2005. Details are not yet available but the abilition is not expected to be retrospective. We will provide an update when there is clarity surrounding the precise fashion in which the tax is being withdrawn.
Other Costs
When you sell a property, and depending on the state or territory your house
is located in (given the different state and territory requirements), you may be also
responsible for paying the costs of:
- search fees - to check you can legally sell the property and to calculate any money
owing, such as land tax, water and sewerage rates, and so on
- termite and pest certificates, which are compulsory in some states and territories
- mortgage discharge fees, if applicable
- conveyancing costs, if you use a solicitor or conveyancer, and
- if it applies, supplying the house's energy rating
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Created by PiXEL iNK MEDiA