Ten essential budget items for buying and selling property at the same time
Here are 10 costs to consider that will help you to avoid financial stress while you’ve got your property up for sale and you’re scouring the market looking for your next home.
Never take your eye off the ball. Anyone who’s played cricket or tennis knows that is a crucial piece of advice. When it comes to buying and selling property at the same time, taking your eye off the ball means getting distracted with one side of the equation, maybe that beautiful new home near the beach, and you end up copping a bouncer when costs you haven’t considered sneak up on you. To get you started, we’ve got both sides of the process covered.
Real estate agent’s fee
Real estate agents often work in two ways: either a flat fee or commission, a percentage of the final sale price. Just remember cheaper is not always better. You are buying experience and knowledge to get a premium sales price.
The vendor covers the cost of marketing. A good marketing campaign will generally include photography, video, a floor plan, sign board, copywriting, several websites and production of brochures and flyers that are used for inspections and auctions. The cost can vary depending on the size of the property, chosen options and the type of buyer we want to target.
You need a licensed conveyancer or solicitor to transfer the legal ownership of the property. Solicitors can often cost a little more but may have more legal expertise and may also offer advice when the property transaction involves more complex contracts. It’s best to get quotes as the cost may vary depending on which company you choose and the nature of their involvement.
Mortgage exit fees
Some lenders may charge you exit fees when you sell your property, and for some fixed term loan types, you may have to pay early repayment costs. Talk to your lender about the costs specific to your mortgage as cost may vary.
A nice throw rug on your favourite, but tired-looking chair, or the temporary addition of plants and other finishing touches can add a wow factor when people inspect the property. And that wow factor can mean a better sales price. Impressions count, and a home stylist is often a worthwhile investment. Costs vary depending on the size of the home, and the number of items needed to create a winning look.
Pest and building report
These are essential for a clean cut sale and protect you from any other last-minute shocks that a potential buyer may uncover. You don’t want the discovery of structural problems, termites or other hidden problems to surface as your buyers may walk away.
So often forgotten is what happens prior to settlement. You’ll need to arrange to vacate the property, which without a doubt means hiring a removalist to help you with one of life’s more arduous tasks. Removalist costs are based on the size of your move, the distance of your move, and the quality of the service. This means prices can vary greatly. Think about your circumstances, and start getting quotes for this essential budget item.
Still commonly referred to as stamp duty, transfer duty is a fee paid to the state government based on the property’s sale price or its current market value, whichever is higher. In NSW, the transfer duty is calculated using a schedule of fee per $100 of the sales price. For example a home sold for $1 million would have a transfer fee of $40,335. Different fee schedules apply for residential properties worth more than $3 million. Check the NSW Government’s transfer duty calculator to determine your costs.
Lenders Mortgage Insurance
This likely won’t apply if you’ve owned your home for some time and have equity in it. That said, if you don’t have more than 20% of the home value as a deposit, you’ll likely have to pay Lenders Mortgage Insurance (LMI). Different lenders have varying rates and ways of calculating the LMI, speak to your lender about those costs, which can run into the tens of thousands of dollars.
Stata reports are useful for buying an apartment, unit or townhouse owned under a strata title, where the individual unit or ‘lot’ owners have joint ownership for some areas of the land. But shared ownership also means shared costs. A strata report will tell you the body corporates history, the financial state of the scheme, annual fees for maintenance and repair, levies, disputes between owners, and any future costs or obligations that you need to know about.
Handled correctly buying and selling at the same time can be a smooth process. Talk to us about managing the buying and selling process for you.
Nothing excites me more than hearing the phrase, “it can’t be done”. To outsiders, selling real estate can look like a straightforward business, but there are numerous challenges and pitfalls that can make it interesting. I love a challenge and working with people to solve problems. I’m the sort of person who takes on a sale that others have put in the too-hard basket. I get a big kick out of it knowing I’ve helped someone with a major moment in their lives, passing on my knowledge and experience gained from 24 years in the industry to help clients achieve their property goals.