Avoid nasty surprises if you’re selling For Sale By Owner by factoring in these closing costs
When it comes to selling your home in a For Sale by Owner transaction (selling your own home without using a real estate agent), the closing costs can vary according to your property and personal lending circumstances. But it’s worth calculating a rough estimate for your closing costs, so you can keep them in mind when working out your asking price.
Closing costs eat into your profit margin once you secure a sale for your property. If you don’t factor them in, you could end up with less in your pocket than you were expecting – and a higher mortgage on your next property, if you intend to buy again.
3 typical closing fees For Sale by Owner
If you’re exiting your mortgage before the term of your loan, you may face discharge fees from your lender as well as any prorated interest that makes your mortgage payoff balance slightly higher than the outstanding balance remaining on your loan.
It’s worth contacting your lender before you work out your asking price for your property to make sure you understand all the costs you’ll have to pay when settling your loan. If you intend to buy again, you may be able to transfer your existing loan to your new property to minimise fees.
Of course, there are costs associated with the legal transfer of ownership for your property from you, as seller, to your buyer. This process can be complex with many legal pitfalls – a professional conveyancer or solicitor should mitigate risks and make sure your legal interests are protected.
The laws when it comes to transferring ownership of property are different within each Australian state and the fees will vary according to the demands of your property. A transfer of ownership is usually broken down into 3 fee types:
- A general fixed legal fee for your conveyancer or solicitor’s time and labour to draw up the Contract of Sale and Section 32
- Standard search fees, including utilities and third-party costs payable to the council etc.
- Any additional costs associated with more complex sales terms and conditions
As a seller, you don’t owe stamp duty on the sale of your property – this is paid by the buyer. However, there may be transfer taxes and recording fees (to record or register the sale of your property) imposed by your local or state government. These, alongside any council and body corporate rates, will need to be paid before transfer of ownership.
Other closing costs For Sale by Owner
If you’re selling an investment property, you’ll be liable to pay Capital Gains Tax (CGT) <link to closing costs for selling a house stamp duty>. This does not apply if you’re selling your primary residence, in which case you’re exempt from paying taxes for any capital gains associated with your property.
As well as the above closing costs, if you’re selling For Sale By Owner, you may agree to pay part, or all, of your buyer’s closing costs as an incentive to close a sale. You’ll need to take into account that buyers face substantially larger closing costs than sellers, including stamp duty. Often sellers choose to include a flat dollar amount typical of a buyer’s closing costs or a small percentage of their mortgage cost.
Interested in selling For Sale By Owner? We can walk you through the process, saving you thousands in expensive agent commissions. Call PropertyNow on 1300 664 773.