by Belinda Scott- Principal Licensed Conveyancer â€“ Easy Move Conveyancing
Buying a property
You have found your dream home or the next property that you want to buy with a price of let’s say $500,000. You have managed to get together the 10% deposit of $50,000. You have spoken to the bank and can get a loan for the balance? You have to come up with another $450,000 to complete the purchase price of $500,000, right? Wrong.
In addition to the advertised selling price of $500,000, there are also other fees and charges that many people do not think about when buying a property. Some of these must be paid upfront, and all of these additional fees can add up to an additional $40,000 on a $500,000 Property.
These â€œHidden Costsâ€ include:
- GST â€“ With some properties, GST will be applicable, and the contract could be read in small print â€œPlus GSTâ€. If that were to happen on a $500,000 property, you will have to pay an additional $50,000 in GST at settlement.
- Stamp Duties â€“ On $500,000 it could be anywhere to $8,000 – $22,000 . There are some cases where you can get a reduction in stamp duty, and first home buyers are even exempt currently. However, you should always work out what the full amount of stamp duty is, and be prepared to have to pay it, as it is not a guarantee that you will receive the reduction or exemption on duty at settlement. Sometimes even though you may be entitled to it, if you are missing documentation that proves it, you may have to pay the full duty, and then apply for a refund.
- Registration fees â€“ These are usually $120 plus transfer fees of between $800-$1500 on average. Your higher value homes can be up to $3600 Legal fees for your Solicitor or Conveyancer (Conveyancing) $1500 on average. Adjustments can anywhere between $500 – $2500 on average. Adjustments are the balancing of the council rates and water rates, owners corporation fee, or any other charge on the land that is applicable to the property.
- Bank/lender fees (loan and mortgage insurance) â€“ This can be up around $2,000-$3,000. Building/pest inspections average cost is around $600.
So all up if you have someone entitled to exemptions or concession, the costs can still add up to around $18,000. For a purchaser who is not entitled to any concessions or exemptions, the additional costs on a $500,000 property add up to around $39,000-$41,000.
Your $500,000 purchase is now actually $540,000. Land Tax is not payable every property that is purchased, however, if you also had Land Tax included as an adjustment, it add up to $500-$6000 on average, or sometimes more.
Selling a property
Agents fees Commission is on average anywhere from 2%-3.5% of the sale price, plus advertising or marketing of around $1000- $3000. On $500,000 this adds up to around $12,000-$15,000.
- Conveyancing/Legal fees on Average $1500
- Transfer fees These include the discharge of mortgage ( if you have a loan) or paying to withdraw caveats. This must be done if they are registered ion the title, as it is a requirement to give â€œclear titleâ€.
- Lenders fees are fees charged by the bank for preparation of documents, and completing the discharge for settlement. If you have a loan you may also need to pay a â€œbreak feeâ€. These can be as little as a few thousand dollars through to tens of thousands of dollars. These will be in your loan agreement, so do check these carefully before you put your property on the market, especially if you have financed or refinanced the loan in the last few years.
- Capital gains tax If itâ€™s been an investment property, you will have a liability. Please seek advice from your accountant regarding this.
- Additionally, if you have been residing out of Australia at any time in the last 5 years you may be considered a Foreign Resident for tax purposes and be required to pay a further 12.5 % capital gains withholding.
There is a lot of discounted offers for conveyancing now, some as low as $500. Whilst it may be tempting to go with the lowest quote, you need to ask yourself are you really going to be saving money, or could you be paying for trouble down the track?
Always ask is the fee fixed? Or is the fee quoted inclusive of Disbursements and GST. Often when you get a low quote such a $500 it does not include disbursements. What are these? Disbursements are the fees and charges that conveyancers or Solicitors pay out on your behalf to complete the transaction for you. These include certificates and searches which are needed to be completed in the Conveyancing transaction. These at a minimum can cost around $350-$550.
Therefore, it would be impossible for someone to complete the work for you for only $500. That is unless they are cutting corners, and therefore putting you at risk. As a seller or Vendor, if the correct documentation is not supplied, including all legally required searches, your sale can be put at risk, and worse, you could be sued, or fined for breaches of the legislation.
As a buyer, if your representative does not do the right searches, and check everything the Vendor has provided is correct, you could be buying a whole lot of trouble, or even the wrong property! Or you could end up with thousands of dollars of back taxes and rates owing, which you are now responsible for as you have now taken title to the property. Make sure your conveyancer is licensed, and suitably experienced. Not every Conveyancer or Solicitor is the same.
In the property world, cheaper is not better, you definitely get what you pay for.
Buying or selling a property is one of the biggest financial transactions you can ever make, and if it goes wrong it could financially ruin you, so please do your homework, and get someone qualified and experienced to do your conveyancing for you.
Easy Move Conveyancing has been around for 20 years, and Principal Licensee Belinda Scott is not only an experienced Conveyancer, but also the Author of several conveyancing guides, and is also the Head Trainer in the Advanced Diploma of Conveyancing (which is the qualification needed to be a conveyancer), for the past 10 years at several RTOâ€™s . She has recently completed the rewrite of
the new national course for the Advanced Diploma of Conveyancing and has mentored hundreds of Conveyancing Students.
Belinda and the team are also part of the TBA Law group and so can handle
a much more diverse range of matters for you. Conveniently there are offices in Seymour, Wallan, Romsey and Nagambie. Call on 1300 459 694 or email firstname.lastname@example.org to get advice tailored to your situation.