The hidden costs of buying after selling, and how to mitigate them

Buying or selling a property is a significant financial undertaking that involves various costs and complexities. From agent commissions to legal fees, the expenses can quickly add up, making it essential for both buyers and sellers to have a clear understanding of the financial aspects of real estate transactions.

In this article, we’ll explore the costs involved in buying and selling a property, the equity requirements, and how Equity Flow provides a solution to streamline the process.

Costs When Selling a Property

Selling a property has its fair share of costs and expenses. It’s not always about finding the right buyer and signing on the dotted line; there’s a whole financial landscape to navigate. Let’s take a closer look at what sellers need to keep in mind when going to market.

• Agent Commissions: Real estate agent commissions typically range from 1% to 3% of the property’s sale price. This fee covers the agent’s services in marketing the property, negotiating with buyers, and handling the transaction process.
• Marketing and Advertising Costs: Sellers may incur additional expenses for marketing and advertising their property to attract potential buyers. This can include professional photography, online listings for major real estate portals, signage, and print advertising.
• Legal Fees: Sellers are responsible for paying legal fees associated with the sale of their property, including conveyancing fees and legal documentation.
• Property Styling and Presentation Expenses: To maximise the appeal of their property to potential buyers, sellers may choose to invest in property styling and presentation services. This can include home staging, landscaping, and minor renovations.

Costs When Buying a Property

There’s nothing quite like the excitement of buying a new home. But along with the thrill of house hunting comes a hefty dose of financial reality. From the moment you start envisioning your dream home to the day you finally get the keys, there are expenses lurking around the corner. Here’s what you need to know:

• Stamp Duty: Stamp duty is a tax levied by state governments on property purchases and varies depending on the property’s value and location.
• Legal and Conveyancing Fees: Buyers need to engage the services of a solicitor or conveyancer to handle the legal aspects of the property purchase, including title searches, contract reviews, and property transfers.
• Mortgage Registration Fees: Buyers need to pay a fee to register the mortgage on the property with the relevant government authority.
• Building and Pest Inspections: Buyers may choose to conduct building and pest inspections to assess the property’s condition and identify any issues that may affect its value or habitability.
• Connecting Gas, Electricity, and Telecommunications: Buyers may need to cover the costs associated with connecting essential utilities to their new property.
• Moving Costs: Buyers also need to budget for moving expenses, including hiring removalists, transportation, and packing materials.

Equity Requirements and Ongoing Costs

When it comes to real estate transactions, having some cash on hand is essential. Whether you’re buying or selling, there are upfront costs to consider, ranging from agent commissions to legal fees and moving expenses.

Let’s break it down further.

The upfront costs of buying a house can vary but are typically between 7 and 11% of the purchase price. For example, on a $500,000 home loan, you could expect to pay anywhere from $35,000 to $55,000 in extra fees in addition to the house deposit.

These costs may include legal services for transferring property ownership, which can range from $700 – $2,500, or moving costs, which typically fall between $500 – $1,000. While Stamp Duty varies for each state in Australia, this typically ranges between 3-4% of the property’s value.

For vendors, once you decide to list your property for sale, you’ll enter a timeline that involves various stages, from listing to settlement.

For buyers, the journey begins with house hunting and ends with settling into their new home. Throughout this process, there are ongoing costs to consider, such as strata fees, council rates, home and contents insurance and maintenance and repairs.

Understanding both the upfront and ongoing costs involved in real estate transactions is essential for buyers and sellers. By being financially prepared and aware of the timeline, you can navigate the process with confidence and ease.

Bridging finance through Equity Flow as a solution

Real estate transactions can certainly pose financial challenges, but with Equity Flow by your side, you can overcome these obstacles with ease. Equity Flow is a Homely partner and a specialist in real estate financial solutions, empowering homeowners to unlock the hidden equity in their property. By allowing homeowners to access their equity, Equity Flow enables sellers to cover costs such as agent commissions, legal fees, and marketing expenses. For buyers, Equity Flow provides the liquidity needed to fund upfront expenses like stamp duty, legal fees, and property valuations.

With flexible repayment terms, homeowners can repay the borrowed funds at their own pace, once their property settles.

Navigating the financial aspects of real estate can feel like traversing uncharted territory. However, with the right support in place, buyers and sellers can confidently navigate this terrain, ensuring a smoother and more manageable journey to property ownership or sale.

With this assistance at hand, the process becomes not only more manageable but also more rewarding, allowing homeowners to embark on their real estate journey with confidence and peace of mind.

Find out more about Equity Flow here.