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Selling a house can be a stressful and costly process, so it pays to understand all the potential costs that may be involved. Costs can vary depending on where you live, so the costs of selling a house in New South Wales may look quite different to the costs you’d expect in other states. To make this process less daunting, it’s important to be aware of all these expenses and budget accordingly for your situation.
Let’s now look at some of the expenses associated with selling a home in NSW, unpacking things like: real estate commission fees, conveyancing, and some of the additional expenses you may incur during the process of selling a property.
If you choose to use a real estate agent, commissions will be one of the more significant costs you’ll incur during the selling process. That’s not to say this is a bad thing, a good agent is worth their weight in gold, working in your interest to get you a top sale result.
In NSW, agent commission rates can vary depending on factors such as the real estate agent you use, and whether the property is located in a metro or a regional area. What you pay can also depend on the type of arrangement you choose to put in place with your agent, for example, using tiered commission rates rather than a fixed rate (more on that below.)
According to OpenAgent, in metropolitan areas of NSW, commission rates typically fall within the range of 2% to 2.5%. If you were to sell a $1 million property in a metropolitan inner-Sydney suburb, you could expect to pay anywhere from $20,000 to $25,000 in agent commission.
On the other hand, in semi-rural/regional areas, these rates are slightly higher, ranging from 2.5% to 3.5%. Here, a $1 million property sold in a regional city would incur roughly $25,000 to $30,000 in agent commission.
Commission rates are impacted by a number of factors, including the agent you use, and where the property is located.
In regional areas, commission rates tend to be a little bit higher compared to metro regions, this is because it typically can take longer for properties to sell, meaning the agent needs to work even harder to get a sale across the line.
This difference in commission fees shows the importance of understanding local market dynamics and negotiating with agents to find a fair and competitive rate.
To find out what the average commission is in your area, you can use this handy commission rate calculator.
When you start speaking to agents the topic of commissions will naturally arise. Typically sellers generally choose a fixed commission rate arrangement, but there is also the possibility of using what is known as a tiered commission structure which can be beneficial if you’re trying to really incentivise your chosen agent to get you a stellar result. The commission that’s best for you is really down to your own unique selling scenario and what your agent recommends.
It's important for sellers to be aware of these differing approaches when considering the cost of hiring an agent. We outline the differences below.
Fixed commission structure
When determining real estate agent commissions methods, the fixed commission fee method stands as a popular choice. This straightforward approach involves a basic calculation: the negotiated commission rate multiplied by the final sale price, yielding the final commission payable to your agent.
Let's say you achieve a sale price of $1,000,000, and you and your agent have agreed upon a commission rate of 2%. Applying the fixed commission formula, the resulting commission payable amounts to $20,000 ($1,000,000 x 2%).
Through this uncomplicated yet effective method, the fixed commission structure streamlines the process of determining agent commissions, providing clarity and transparency for both sellers and agents.
Tiered commission structure
As noted earlier, a tiered commission structure works to incentivise real estate agents to achieve a higher sale price for your property. It involves setting different commission rates based on performance targets that the agent hits.
Typically, an agreed target sale price is established, and two commission rates are defined:
Imagine you've sold your property for $1,000,000, and you and your agent had previously agreed upon a tiered commission structure entailing a 1.5% commission rate for amounts below the agreed sale price and a 2.5% commission rate for any portion above it.
If the sale price falls below the agreed target, the commission rate is set at 1.5%. This ensures that even if the sale price is lower than expected, the agent's efforts are still rewarded. In this case, the commission would amount to $15,000 ($1,000,000 x 0.015).
However, the real incentive kicks in when the sale price surpasses the agreed threshold. For any portion of the sale price above the agreed sale price, the commission rate increases to 2.5%. Assuming your property sold for $1,100,000 ($100,000 above the threshold), the agent would be entitled to an additional commission of $2,500 ($100,000 x 0.025).
Find out how either of these scenarios could play out for your property by using OpenAgent’s commission calculator.
One cost that sellers need to be aware of is conveyancing fees. Conveyancing is a crucial legal process that involves transferring the property's ownership from the seller to the buyer. The cost of conveyancing can vary based on several factors, and it’s essential for sellers to understand the intricacies of these fees.
Conveyancing fees are not fixed, as they depend on the services provided by the conveyancer and the level of legal expertise required for the particular transaction.
In NSW, the average cost of conveyancing is approximately $1,400. However, sellers can expect to be charged anywhere between $400 and $2,200, depending on various factors that come into play during the transaction.
These factors can include:
It’s a good idea to speak to a couple of conveyancers and compare their services and fees to find the right one for you. You can usually get a recommendation from family, friends, agents you work with, and mortgage brokers.
You should always do your due diligence and check that any conveyancer you are considering working with has a current licence. In NSW, you can check conveyancing licences on the fair trading website.
When it comes to real estate marketing costs, you should be aware that these expenses can vary quite a bit. In NSW, these costs can fall within the range of $600 to $10,000, depending on the level of marketing you do and the spaces in which you decide to market including:
On average, this cost typically amounts to about 0.5% to 1% of the price you're aiming to sell the property for. For a $1 million home, you could expect marketing costs to be around $5,000 to $10,000.
These marketing expenses play a crucial role in attracting potential buyers and creating visibility for your property in the competitive real estate market. It's essential to factor in these costs as you plan your overall budget for selling your house in NSW.
Find out about more of these costs here.
An auction is a public sale that involves potential buyers bidding on properties in real-time. If bids go beyond a reserve price (the lowest amount the property can be sold for), the highest bidder at the end of the auction has to sign the contract on the spot to finalise the sale.
In NSW, auctioneers can charge anywhere between $400 and $1,000 to sell a house but it may be higher or lower depending on your area and the current market conditions.
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It’s therefore crucial that you speak to any agents you engage about what they would recommend for your property and location.
In a private treaty sale, you, as the homeowner, decide on the price you want to sell your property for. Then, your real estate agent works one-on-one with potential buyers to try and get the best deal as close to your price as they can.
Selling via private treaty doesn’t incur any additional costs, as the agent facilitates the sale, rather than an agent and an auctioneer.
Private treaty can be a popular way of selling a home in locations where auctions aren’t the norm. Some vendors may choose to sell via private treaty, even if the market is super competitive, because they’re confident they’ll still get a great price. Some sellers may also dislike the pressure that can often come with going to auction, so choose to sell via a private treaty route instead.
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When it comes to selling a property, the tender process offers a different way to handle transactions.
Here's how it works: potential buyers submit single offers, usually with a 5 or 10 percent deposit. You and your agent review these offers and decide which ones to accept or reject based on your preferences. How much you pay is dependent on the price agreed upon between you and your agent.
This method is usually used when dealing with high-end residential properties, homes with distinct features or properties with potential for development. It’s particularly useful for property types (like the ones just listed) that may not have a clear market value due to their uniqueness.
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When you’re selling a property, you may also be trying to juggle the prospect of buying your next home, or finding a rental to live in. This can be a stressful and/or costly process, especially in a market where both sale and rental listings are low.
It’s important to factor in these possibilities before you enter the selling process so that you prepare. Be aware that if you’re looking to purchase your next home, and can’t find something appropriate, then you may need to live in temporary housing in-between, which is a cost you’ll need to consider.
Many people tend to try and sell first before they even consider buying their next home, or may attempt to buy and sell at the same time and line up settlement dates. It can be done, but it can also be really tricky.
In this particular situation, a bridging loan may be worth considering, allowing you to buy your next home before you sell your current one, which can take enormous stress off you.
You can find out more about bridging loans here, and you can get a better idea of whether you should buy or sell first here.
Doorsteps Finance Pty Ltd ACN 648 541 879 (credit representative no.531036) and Doorsteps Solutions Pty Ltd ACN 654 334 246, Australian Credit Licence 537369 are wholly owned by OpenAgent Pty Ltd ABN 93 161 595 679 (together, “Doorsteps”). Doorsteps are not making any suggestion or recommendation about any particular product or service. Any credit application is subject to approval, terms and conditions, fees and charges.
Doorsteps Finance Pty Ltd ACN 648 541 879 and Doorsteps Solutions Pty Ltd ACN 654 334 246, Australian Credit Licence 537369 are wholly owned by OpenAgent Pty Ltd ABN 93 161 595 679 (together, “Doorsteps”). Doorsteps are not making any suggestion or recommendation about any particular product or service.
Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk. The calculator output is only an estimate based on the information provided. It is not meant to be a substitute for professional financial advice. While Doorsteps has based the information on sources that we believe are reliable and accurate, the actual commission payable may differ depending on a range of factors outside of our control. For this reason, you should consider the appropriateness of the information and, if necessary, seek appropriate professional advice.
This article is written expressly for education purposes and content is based on the opinions of the authors or as otherwise cited. The information we provide is general in nature and does not take into account your personal objectives or needs. All information is current as at publication release and we take no responsibility for any factors that may change thereafter. Doorsteps does not accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person or entity arising from the use of this information.
