Investing in real estate can be a lucrative venture in Australia’s dynamic property market. However, it’s essential to understand the various costs associated with buying and selling property to make informed decisions and maximise your returns.
This range of costs can significantly impact your financial situation. It’s crucial to be aware of these expenses, plan accordingly and, if possible, seek professional advice to make informed decisions.
Whether you’re a first time buyer entering the market or a seasoned investor, understanding the intricacies of property costs is vital for a successful real estate journey. Keep in mind that property costs can vary widely depending on factors such as location, property type and market conditions. Therefore, conducting thorough research and budgeting appropriately is key to achieving your property goals.
Below we delve into the intricacies of these expenses and help you navigate the costs involved in the Australian property landscape.
THE COSTS OF BUYING PROPERTY
To secure your property, you’ll need to pay a deposit, typically between 10% and 20% of the purchase price. This amount can vary, and a larger deposit may be required to secure a more desirable loan arrangement.
First home buyers may be able to rely on the bank of mum and dad and secure a parental guarantee that may reduce the deposit amount or remove it all together. This is worth having a chat with us.
Stamp duty is a significant upfront cost that varies across Australian states and territories. It depends on the property’s value and location. First time homebuyers may be eligible for exemptions or concessions.
Lenders’ mortgage insurance (LMI)
If your deposit is less than 20% of the property’s value, your lender may require LMI. This insurance protects the lender, but you’ll need to cover the premium.
Contact us for the common links to calculate your potential stamp duty and LMI.
Hiring a conveyancer or solicitor is essential to ensure a smooth transaction. Legal fees cover the documentation, title search and settlement processes. Costs vary, so it’s advisable to obtain quotes.
Building and pest inspection
A thorough property inspection can reveal potential issues. While not mandatory, it’s a wise investment to prevent future unexpected costs.
Before settlement, it’s crucial to arrange home and contents insurance. Investors need landlord insurance to protect their new investment.
Mortgage application and ongoing account fees can add up. We will outline the associated fees with any finance we are reviewing and considering for you.
Property advocate fees
If you choose to outsource your property shopping, then there is a price to pay. However, although there is a cost to find your perfect home or investment property, although not guaranteed, your buyers’ agent will often save you the same amount or more when negotiating the sale price for you.
AND, you do need to consider the time savings from having to do it yourself. Sometimes that’s worth its weight in gold!
THE COSTS OF SELLING PROPERTY
The biggest one will be your real estate agent’s commission
Most sellers engage a real estate agent to market and sell their property. Agents’ commissions vary but typically range from 1.5% to 2% + GST of the sale price.
Marketing and advertising
To attract potential buyers, you’ll need to invest in marketing and advertising campaigns. This includes professional photography, online listings and property signage.
Just as when buying, you’ll need a solicitor or conveyancer to handle the legal aspects of the sale. Their fees cover contract preparation, negotiations and the disbursement of funds at settlement.
Presenting your property in the best light often involves professional staging or styling. While optional, it can increase the property’s appeal and potentially its sale price.
Property maintenance and repairs
Addressing any outstanding maintenance issues or necessary repairs can boost your property’s value and attract buyers.
Capital Gains Tax (CGT)
If you are selling an investment property you will be subject to CGT on any profit. You can either refer to the ATO website link on CGT or seek your accountant’s advice.
If you have a fixed rate mortgage, you may face exit fees for repaying the loan before the fixed term ends.
And of course there are moving in and out costs.