Selling or buying a home in Australia can be an exciting yet challenging process. With many factors affecting real estate sales costs such as agent fees and commissions, advertising expenses, staging fees, and more, it's important for both buyers and sellers to understand all the potential costs involved before entering the market. This guide breaks down the key costs to be aware of when selling property in Australia or purchasing a new home.
Key Steps to Selling Property in Australia
The key steps involved in selling a property in Australia include:
- Choosing a real estate agent: Research agents with good local knowledge and select one you trust to best represent your property. Ensure they outline all their fees and charges upfront.
- Pricing your property: With guidance from your agent, set a competitive asking price by comparing similar properties recently sold in your area. Price it correctly to attract more potential buyers.
- Marketing your listing: Your agent will photograph and advertise your listing across relevant platforms to generate buyer inquiries. You may need to pay additional marketing fees.
- Hosting open houses: Holding open houses creates more opportunities to showcase your property. Be prepared for random viewer inspections and open feedback.
- Receiving and reviewing offers: Your agent will present all offers for your consideration. Settle on one that matches your expectations.
- Negotiating conditions of sale: Choose suitable finance and settlement periods. Insert other conditions (building & pest inspections etc) to best protect your interests.
- Settling the sale: The buyer pays the agreed sale price and ownership officially transfers on the settlement date.
Understanding this overview of the home selling process can help you prepare for what’s required to complete a smooth real estate transaction.
What is the Average Time Taken to Sell a House?
According to the latest real estate market data, it takes around 30-45 days on average to sell a residential property in Australian capital cities this year.
However, the exact timeframe can vary significantly depending on factors like:
- Property type - Standalone houses generally sell quicker than apartments & units
- Location – Highly desirable areas have increased demand from buyers for limited housing stock
- Marketing effectiveness - Good advertising reaches more potential purchasers & reduces days on the market
- Listing price – Accurately priced homes compared to market value will sell faster
- Time of year – Peak seasons often stimulate higher buyer activity leading to quicker sales
Whilst 30-45 days is the national average benchmark, well-presented properties in popular suburbs can transact in under 30 days. Distressed sales may drag on over 90 days to secure a suitable buyer.
Monitoring market conditions in your intended suburb along with leveraging your agent’s resources will help achieve an optimal selling period for your individual property circumstances.
How Much Does it Cost to Sell a House in Australia?
Home sellers in Australia face a variety of expenses which will depend on factors unique to each sale. However, these are the typical costs to consider when determining your total real estate sales costs:
Agent Fees & Commissions
- This is paid to your real estate agent for managing the sales process. Commissions traditionally average 2-3% of the final sale price across Australia. Selling fees can reach up to $30,000 on highly-valued properties.
Advertising & Marketing
- Your agent may charge marketing fees to photograph & advertise your listing across relevant platforms like realestate.com.au, generating greater buyer inquiries. This averages $2,000, but can exceed $20,000 for large prestige campaigns.
Staging
- Strategically furnishing or styling your property highlights its best features to buyers. Staging fees from interior designers & stylists average $2,000-5,000.
Sales Incentives
- While not mandatory, sales incentives like paying stamp duty costs for the buyer or throwing in furnishings may help secure a sale. Budget approximately 1-2% of the property value if offering sweeteners.
Miscellaneous
- Other expenses like sales kits, private listings, property appraisal & inspection reports will add a few hundred dollars. Allow around $500-1,000.
In total, the average cost of selling a $750,000 Australian house is between $30,000-$35,000 - significantly lower than the 10% rule which overestimates market norms. Keep fees reasonable by shopping around for the most suitable selling agent and services for your needs.
Average Real Estate Agent Commissions
Across Australia's residential property market, the current average real estate agent commission rate is 2.12% of the eventual sales price, according to RateMyAgent data. This has gradually trended down from 2.71% over the last decade, as more vendors negotiate better deals in response to rising agent fees.
Whilst percentage-based commissions are still the dominant payment structure, fixed fee, and capped fee alternatives are growing in popularity - now used in around 20% of sales nationally.
In metro areas where property values are higher, fierce competition sees commissions taper down. Inner suburbs command lower average commissions around 1.2-1.8%, whereas remote rural regions with fewer agencies stay closer to the peak of 3%.
So for a property sold for the median Australian house price of $750,000 - you would expect to pay the typical metro agent roughly $15,000. Regional vendors would pay up to $22,500 for the same value sale at higher commission rates.
Choosing an agent with superior marketing reach and sales conversion expertise can achieve a higher sale price - justifying steeper commissions. Opt for lower fixed fees if dealing with a remarkable property expected to create its own buyer demand.
What Affects an Agent's Fees and Commission?
Several factors determine the real estate agent fees and commissions charged on a home's sale, which sellers should understand when selecting their ideal agent:
Experience & Reputation
- Top-tier agents with proven records of achievement can demand premium sales commissions, given the strength of their brand and expertise nets vendors superior prices.
Marketing Investment
- Agencies investing heavily in advertising assets and technology often recoup this through slightly higher commission rates. This expands a listing's promotion through digital platforms.
Location
- Metro or desirable lifestyle region agencies often charge higher commissions around 2-3%. Outer suburbs may see lower 1.5-2.5% rates in line with more affordable property prices.
Property Value
- Commission structures generally account for a home's price, with low-value property fees starting from $10,000. High-end luxury home commissions usually cap around $100,000 based on superior sale prices achieved.
Competition
- Areas with multiple real estate agencies competing create downward pressure on commissions. Less competition sees rates remain higher as vendors choose from limited agent options.
Upfront Costs
- Paying additional upfront fees for marketing or staging may allow you to negotiate the headline commission down to more reasonable levels.
Research agents thoroughly, discuss fee structures upfront, and leverage competing quotes during rate negotiations to help minimize the commission costs of selling your property.
What are the Different Commission Structures?
While percentage-based commissions are still predominant, more agents make use of varied payment structures - so it helps to understand the differences:
Percentage Commissions
This traditional structure sees the agent earn a percentage of the home's final sale price. It typically ranges from 1.5-3% across Australia, scaling up as property values rise.
Capped Commissions
A popular twist is capping commissions once they reach a set fee ceiling - usually between $15,000 to $100,000 depending on property type and value. This protects cost-conscious luxury home vendors.
Fixed Price Fees
Rather than linking to the unpredictable final sale figure, fixed fees provide certainty through charging a flat rate. This falls around $15,000 to $25,000 for most standard properties.
Multi-tiered Commissions
Some agencies structure commissions to increase in set increments linked to higher sale prices achieved - making it performance-based. This rewards sales expertise.
Hybrid Models
Alternatives like a lower fixed fee plus percentage commission on anything earned above the listing price, offer vendors the best of both structures through flexibility.
Shop around the latest commission options rather than assuming percentage-based is the only route. Aligning payment with performance incentives often gets the best results for all parties.
Why is Real Estate So Expensive in Australia?
Several economic factors continue propelling Australia's property prices higher every year, creating affordability issues for many potential buyers:
Property Under-supply
Construction struggles to keep pace with immigration rates boosting population growth and driving residential demand. This strains already undersupplied metro markets like Sydney and Melbourne as buyer competition surges.
Record-Low Interest Rates
Consistently reduced interest rates and cheaper credit since the 2008 financial crisis has made borrowing inflated amounts easier. Flooded markets with cashed-up buyers allow vendors to push asking prices higher.
Investor Tax Incentives
Landlords receive generous tax breaks making buy-to-let highly appealing. Multiple property ownership remains popular for wealth creation - further constraining supply from regular home buyers.
Urban Migration Trends
Younger Australians flocking to sprawling capital cities in search of employment opportunities concentrate demand on a select few locations where density is already stretched.
Development Constraints
Difficulties in increasing housing density to combat shortages through town planning obstacles have contained supply levels. NIMBY protests stifle the construction of units and apartments.
Whilst the perfect storm of factors grows cost barriers each year, smart property investors stand to capitalize by buying real estate early in promising locations destined for future growth and gentrification.
What is the Average Cost of Buying a House in Australia?
- The typical upfront costs involved with purchasing a house in Australia include:
- Deposit - Most lenders require at least a 20% deposit saved based on the purchase price. This contributes toward paying the outstanding mortgage loan principal. Expect to fund at least $150,000 in deposit savings required for Australia's median-priced $750,000 dwelling.
- Stamp Duty - Paid to transfer the property title across to the buyer upon completion. The rate varies across states from 3-to 7% of the total purchase price. Approximately $22,500 - $52,500.
- Legal Fees – Lawyers and conveyancers cost around $2,000 to $4,000 combined to handle all documentation for a standard purchase.
- Mortgage Fees - Lenders charge loan application fees, valuation inspection costs and other administrative mortgage origination expenses totaling $2,000.
- Pest & Building Inspections – Pre-purchase property checks cost from $500 up to $1,000 altogether. Essential due diligence for any buyer.
- Bringing total average buying costs on a $750,000 Australian property to roughly $220,000 as the key expenses that must be funded besides the actual purchase price value. Compare home loans diligently to find features that offset fees and positively leverage deposit funds.
Is Now a Good Time to Buy a House in Perth?
Yes, market data suggests Perth right now represents an opportune window for buyers to secure residential property following years of depressed market activity and price declines after the mining boom peaked in 2014.
Signs confirming Perth's stabilized property market presents good value buying conditions include:
- Median house prices down -15% since the last market peak make real estate more affordable coming off record highs
- Auction clearance rates sustainably above 50% as buyer demand and confidence returns
- Days on market contracting for most listings, signaling vendors receive reasonable interest
- Strong interstate migration influx, population growth, and lower unemployment revitalising the local economy
- Historically low interest rates keep mortgage serviceability achievable despite rising prices
- Oversupply of stock from the apartment boom clearing out also tightens available inventory
Additional tailwinds of rising rents, infrastructure spending, and a lack of new housing supply make Perth property ripe for renewed capital growth off a low base - ideal timing for buyers seeking ownership or investment opportunities.
Research suburbs tipped for gentrification like Victoria Park, North Perth, and Leederville where value remains untapped for maximum growth potential. Acting decisively when indicators align spells successful buying outcomes.
Frequently Asked Questions
What are the main costs when selling a house in Australia?
The main costs vendors face when selling Australian property are real estate agent fees and commissions, advertising and marketing expenses to promote the listing, staging costs to style the property for sale, plus conveyancing and miscellaneous costs allowing for around $500-$1,000.
Should I accept the first offer on my house?
Not necessarily. Considering all offers received allows you to objectively determine which presents the best terms and highest price in line with your expectations. A buyer willing to negotiate or sweeten their initial offer indicates motivated interest worth engaging further.
How much does the average Australian pay in real estate commissions?
The current average commission paid on the typical Australian property sale is 2.12% of the final sale price. So based on median national values, Aussie vendors pay about $15,900 to agents facilitating a $750,000 house transaction on their behalf.
What is the best way to find a reliable real estate agent?
Reading online reviews, checking industry qualification levels, understanding their recent sales record and auction clearance rates, ensure they specialise in your local area, and gauging rapport during an introductory consultation can reveal the most reputable agents worth appointing to sell your property.
What concessions can I offer a buyer to help the sale go through quicker?
Promising to cover stamp duty expenses or throwing in media room electronics/furnishings to sweeten the deal are two of the most appealing incentives you can embed into an offer to entice buyers. Around 1-2% of the property value spent on these sweeteners is normal.
