Anyone who has ever moved house has probably had a moment where they stopped and thought "I am never doing that again".
But when it comes to buying and selling real estate, it turns out the longer you can stay in a property, the better off you will be. Moving often eats up a sizeable proportion of any capital gains you could expect to make.
If you bought a house in Auckland for $600,000 in April 2015, you might assume, based on Real Estate Institute averages, that it was worth just under $700,000 now.
First up, there is the cost of finding a buyer for your property. If you go through an agency, you can expect your agent to sell you a marketing package. This can range from anything from about $800 for the most basic - an ad online, some flyers, booklets and a signboard outside your property - through to $10,000 or more, particularly if you want high-profile print advertising.
About $5000 is normal in bigger centres and $2000 in smaller cities.
If you do not like the idea of paying for marketing, you can negotiate with an agent - if they are desperate for listings they may be willing to split the bill - or you could choose an agency that does not operate with this model.
Then you'll encounter some incidental costs as you get your place ready to go on the market. You might need to pay for carpet cleaning, get someone in to give the garden a good tidy-up and get rid of any rubbish you have lying around. You might also find you want to invest in some finishing touches - rugs, nice bedding, colourful cushions or artwork to bring your living spaces to life or some pot plants to boost the curb appeal of your front door. Set aside $1000 for this if there is nothing major that needs doing.
If you need to pay for homestaging, perhaps because you have already shifted out or do not have enough furniture to fill your house, you'll need to pay about $1500 plus GST for five weeks.
Once you have an offer, you'll see your really big bill from the agent.
On a $700,000 sale, you will pay about $25,000 in commission at the major real estate agencies. There is some variation - Mike Pero would only charge about $20,000 while Bayleys and Leaders would charge more like $30,000.
Real estate agencies charge their commission as a percentage of the sale price. Barfoot & Thompson charges 3.95 per cent of the first $300,000 of the sale price, and 2 per cent on the rest, plus GST. LJ Hooker charges 4 per cent up to $350,000 then 2.5 per cent of the balance, plus GST.
The commission is usually taken from the deposit that the buyer pays when they put in an offer on your property.
You could decide to try to sell the house without an agent. This can be a good option in a hot market but is harder when things are less busy. You'll still need a good marketing budget but you will save on commission. You'll need to decide whether you back your negotiating skills to get you as good a price as an agent would.
You'll also need a lawyer to handle the conveyancing, which is usually around $1000 for a straightforward sale. Then you can add in the costs of hiring movers or renting a truck.
That means your $700,000 Auckland house would end up costing at least $40,000 to sell - or 40 per cent of any capital gain you experienced over the past two years.
In April, Auckland house prices only increased 3 per cent compared to the year before. That means someone buying a $600,000 now would need to stay in it for about two-and-a-half years before their capital gains could cover the costs of the move.
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