Your savings when selling your own house online
There is no doubt you will save thousands of dollars by not paying the hefty fees known as commission. An agent’s commission is often more expensive than you think. So, when you sell your home, an agent would charge anywhere between 2 and 3% of the whole of your selling price. In some states or regional areas, this can be up to 4 and 5%. This can vary and the more expensive your home, but in most cases, it often ends up being around $20,000 - $30,000. Considering Australia's median house price hit $809,349 late in 2019 (which can vary year to year or even quarterly), then the commission on this can be between $16,000 and $24,000. But to know your TRUE savings, we will break this down for you and show you the real percentage of your profit you are giving to an agent.
But to know your TRUE savings, we will break this down for you and show you the real percentage of your profit you are giving to an agent.
A. Take a note of your original purchase price and how long ago that was. Once you have established this, and for this exercise we will use Australia’s median house price, round it off to $809,000 and say it was bought in 2017 and is selling in 2020.
B. Work out or look back in time at the amount of stamp duty you paid – here is a calculator for you to work it out - https://www.e-business.sro.vic.gov.au/calculators/land-transfer-duty
a. In this case is was $43,610.00.
C. So, the house has cost you the original purchase price ($809,000) + the stamp duty (43,610.00) – making it a total of $852,610.
D. If you have done any renovations, then you will need to ad this to the equation, and for this exercise, let’s say you have spent around $30,000 over the 3 years you owned it (this is not unusual as most people who buy a home do some minor upgrades or changes to suit). So, now we have a total of $882,610 that the property has cost you (never mind the interest you have been paying on your mortgage, which we will exclude in our calculations!).
E. So now it comes the time to sell. If we use the average Australian Capital Growth rate of 5.9%, then your property may be worth around $960,000.
F. Using an average commission charge of around 2.5%+gst – making it 2.75% then you would pay 2.75% of $960,000 making it $26,400. So, now let us see the True Commission percentage you are paying…
G. To do this, take your total cost of $882,610 away from your sale price ($960,000) then you are left with $97,390.00. You will have solicitor or conveyancing expenses too, which would be around $1,500. Also, agents often charge for the advertising of your property (online ads, your sign, your brochures etc.). The average cost is around $3,000. So, out of the $97,390, we need to take away the solicitor costs and the agents’ advertising fee, which leaves you with $92,890.00.
H. Now you must pay the agent their commission, which $26,400.00. This works out to be close to 29% of your profit. That is the TRUE Commission you are paying. So, to sell without an agent is a far more cost-effective method.
