One element of selling your home that attracts little attention is the actual cost of the process.
Estimates suggest an average of 5% of a home’s value goes towards fees and taxes.
That’s a chunk of cash and not easily found unless you can dip into the equity in your home loan or access savings.
All is not lost, however. Many sellers use third-party companies to secure short-term loans to cover these costs.
It’s an interesting idea worthy of consideration if the cost of marketing, your agent’s commission and legal fees will be a stretch.
Perhaps its most significant advantage is you don’t make a repayment until your home is sold.
One company, Campaign Agent, recently announced it had loaned more than $1 billion to sellers since its 2015 launch. Its service has been used in some 150,000 transactions.
Another option is Salesfunder, which provides up to $60,000 to pay for fees and finance projects related to your home sale. That means you can renovate a kitchen or bathroom to maximise your home’s value but only pay the bill after your home is sold.
Many clients may benefit from this approach, however we do recommend you consult a licensed financial adviser or accountant.
These are some of the fees a seller will incur:
Marketing
Paid advertising on property portals and quality photography are essential and come at a cost. You can expand your marketing effort by employing video marketing, drone footage and social media.
Legal fees
While kits on the market promise to help you DIY your sale, we recommend using a solicitor. They can also look after your conveyancing needs.
Conveyancer
Conveyancing is a vital process that ensures the property you wish to purchase is unencumbered – that is, there is no loan or promise against it that you might inherit. A conveyancer also checks issues such as boundaries and other legal matters.
Cleaning and maintenance
You may need to hire a contractor to fix problems and call in a professional cleaner so your home is ready for buyer inspections.
Moving costs
While not directly related to a sale, you’ll likely incur a fee for storing and moving furniture and other belongings.
Bank fees
On the basis you’re going to upgrade or downside, you may face bank fees and costs in some form, including the use of their solicitor.
Agent commission
This cost can vary and is paid as an integral part of the sales transaction.
NOTE: The information in this article is general in nature and provided as a market overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.