Should you sell your home yourself?

Should you sell your home yourself?

If you’re looking into selling your home, you would have noticed the thousands of dollars in fees it takes to employ the services of an agent.

The alternatives are few and far between, however, as it is a case of either dedicating your own resources to selling the property or forking out the cash.

While innovation in this area is hitting our shores, in the form of UK founded PurpleBricks, who claim they will sell your house for a flat fee of $4,500, for most people it comes down to a choice between employing an agent or going it alone.

If you do decide you have the time and energy to try and sell your property on your own, here are some things to keep in mind:

Weigh up the cost of doing the conveyancing yourself

Selling your home isn’t only about getting the word out and attracting buyers, there’s also the more complex side of the bargain in the form of legal contracts. Making sure that the legal side of selling your home is done correctly is of the utmost important and probably not the best place to skimp on cost if you doubt your capability of pulling it off. Employing a professional to take care of this part of the deal will still cost you a couple of thousand dollars but will certainly put your mind at ease.

Determine the right price

Look around the market to make sure you set your starting price at a good benchmark to begin negotiations. As this is the basis for discussions with potential buyers you will have to find a number that is not too high but that isn’t going to sell your property short either. In the absence of a professional opinion, using property listing sites to see what similar properties in your area have sold for should give you a good idea of where to begin.

Making the property look picture perfect

Here is where you employ every real estate agent cliché in the book to make sure your home looks attractive to potential buyers. Think fresh cut flowers and gleaming bench tops to create the image that this property is somewhere desirable to live in. Minimise clutter around the house and try and evacuate family members and pets before inspections. Just because you are selling the property yourself, it doesn’t mean you can’t present the property professionally.  

Take advantage of online services

Sites like sellingmyhouse.com.au offer to assist in the promotion of your property by helping out with online listings and hard copy promotional materials. For different prices you can purchase packages that include things like a sign to display in front of your home and flyers. It may be worth incurring a cost of around $300 to ensure that the word gets out to potential buyers that your property is up for sale.

In the end, the decision to sell your own home will come down to whether you have the time and inclination to try the process solo. Keep in mind that buyers have come to expect a certain level of professionalism when looking at potential properties and may be put off if your listing appears too different or casual. Emulating a professional approach for a fraction of the price should be the end goal to attract the right buyer for your property.

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What is equity? How can I use equity in my home loan?

Equity refers to the difference between what your property is worth and how much you owe on it. Essentially, it is the amount you have repaid on your home loan to date, although if your property has gone up in value it can sometimes be a lot more.

You can use the equity in your home loan to finance renovations on your existing property or as a deposit on an investment property. It can also be accessed for other investment opportunities or smaller purchases, such as a car or holiday, using a redraw facility.

Once you are over 65 you can even use the equity in your home loan as a source of income by taking out a reverse mortgage. This will let you access the equity in your loan in the form of regular payments which will be paid back to the bank following your death by selling your property. But like all financial products, it’s best to seek professional advice before you sign on the dotted line.

What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

This type of loan is a flexible mortgage that allows you to draw on funds when you need them, similar to a credit card.

What is stamp duty?

Stamp duty is the tax that must be paid when purchasing a property in Australia.

It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.

What is equity and home equity?

The percentage of a property effectively ‘owned’ by the borrower, equity is calculated by subtracting the amount currently owing on a mortgage from the property’s current value. As you pay back your mortgage’s principal, your home equity increases. Equity can be affected by changes in market value or improvements to your property.

What fees are there when buying a house?

Buying a home comes with ‘hidden fees’ that should be factored in when considering how much the total cost of your new home will be. These can include stamp duty, title registration costs, building inspection fees, loan establishment fee, lenders mortgage insurance (LMI), legal fees and bank valuation costs.

Tip: you can calculate your stamp duty costs as well as LMI in Rate City mortgage repayments calculator

Some of these fees can be taken out of the mix, such as LMI, if you have a big enough deposit or by asking your lender to waive establishment fees for your loan. Even so, fees can run into the thousands of dollars on top of the purchase price.

Keep this in mind when deciding if you are ready to make the move in to the property market.

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What does pre-approval' mean?

Pre-approval for a home loan is an agreement between you and your lender that, subject to certain conditions, you will be able to borrow a set amount when you find the property you want to buy. This approach is useful if you are in the early stages of surveying the property market and need to know how much money you can spend to help guide your search.

It is also useful when you are heading into an auction and want to be able to bid with confidence. Once you have found the property you want to buy you will need to receive formal approval from your bank.

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

What is an investment loan?

An investment loan is a home loan that is taken out to purchase a property purely for investment purposes. This means that the purchaser will not be living in the property but will instead rent it out or simply retain it for purposes of capital growth.