Selling your house or investment property may be one of the most significant financial transactions of your life. But how much of your profits will actually reach your bank balance? How much money do you really keep when you sell your house?
The answer is, like so many other things: it depends.
There is no one-size-fits-all when it comes to making profits from real estate transactions. The amount of money you keep from selling your house relies entirely on what costs you incur during the selling process. Other expenses depend on your unique circumstances.
The 4 considerable costs of selling a house that deplete your profits.
The real estate process is complicated, and there are four sizeable costs you might have to cover to sell your home for the best price possible. Some are unavoidable; others you can reduce with some good advice and smart thinking.
Let’s take a closer look at them.
1. Agents & marketing costs.
The Australian Real Estate Industry is still dominated by a commission model, and if you choose to go with an agent, this is potentially a massive blow to your net profits.
On average, agents charge around 2-3% + GST of your final sales price. For example, that means a $500,000 property will attract a fee of approximately $10,000 + GST at best.
This fee doesn’t cover marketing costs, however. You’ll pay the agent extra on top of the commission to create:
Videos & walkthroughs
Listings on realestate.com.au and domain.com.au
How much out of pocket will you be? Depending on where your property is, you could pay $4000 on marketing, or you could get slammed with a whopping $10,000 bill for a premium suburb and high-end listing.
So, if you go with a real estate agent, you’ll keep $486,000 of your $500,000 sale price after commission and marketing costs.
Wait, there’s more.
2. Legal fees.
Lawyers play a vital role in the sales process in Australia. You’ll need to hire a conveyancer to prepare your home for sale to draft a legally binding contract, mortgage documents and other sales documents.
How much out of pocket will you be? A good conveyancer will cost around $1,650 plus disbursements. That leaves you with about $483,300 from your $500K sale.
But that’s not all.
3. Paying out your mortgage.
If you don’t own your home outright, you’ll likely need to pay off any outstanding mortgage on your property with the sale proceeds. In some cases, you might also need to pay a break fee to settle your mortgage early.
How much out of pocket will you be?
Of course, this cost is unique to your circumstances, but for the sake of our simple example, let’s say you owe $150,000. That leaves you with a cool $333,350 profit.
We’re not done yet.
4. Capital Gains Tax.
Most people forget about this one because you pay it as part of your annual tax bill, but only if you purchased it after 1985 or the property isn’t your Principal Place of Residence.
The amount you pay is also higher if you sell your property within one year of buying it (so CGT is of particular interest to property investors). There are other implications if you’ve lived overseas during this time.
How much out of pocket will you be?
Because there are so many factors involved in calculating CGT, it’s best to contact your accountant for a full rundown of what you might owe.
How to maximise how much you keep when you sell your house.
While you can’t do much about paying out your mortgage or being slammed with CGT when selling your house, there are ways to cut your costs and boost your net profits.
The process of selling real estate is easier these days since most buyers research and buy properties online. And that means it’s easier than ever to ditch your agent and handle the sale yourself.
You get all the services a real estate agent offers at a fixed listing price with a platform like PropertyNow. We’re here to show you how to sell a house without paying an agent commission.
That doesn’t mean you have to do it alone. We’ll give you access to the tools you need to sell your home. And you’ll save a ton of money compared to paying an agent’s commission—our fixed service price is just $694.
How much out of pocket will you be if you ditch the agent and sell yourself? Instead of pocketing $333,350, you’ll bank at least $344,350 and save even more on marketing. That’s no small bickies!
Find out more about PropertyNow’s services and boost your net selling profits today.
At PropertyNow, we empower you to sell it yourself and pocket the savings in agent commissions. Plus, you get all the support and resources you need throughout the listing process and access to our team of experts via phone call, SMS, or live chat.