What hidden costs are there when selling an Auckland apartment?
Owners are often under the assumption when selling, that the only costs involved are marketing and the agents commission however, there are hidden costs that most are not aware of.
You need to be aware of a pre-contractual disclosure coast – sometimes a Body Corporate wont charge you for this and others can charge upwards to $350. This is mandatory to get and the agent cannot sell an apartment to you without one. If requested through us at Apartment Specialists we can potentially save you that fee.
While requesting the Body Corporate minutes might only be small fee of around $25, be aware there is a fee for these.
Lawyers fees need to be taken into account too, these can be anywhere from around $1000 up to around $1400.
Today's podcast shares information about hidden charges that Auckland Apartment sellers are not aware of. Find out what surprise costs can disrupt the process of selling your apartment quickly, and frustrate the heck out of you.
You need to budget for a potential loss of income as a seller if your tenant vacates the property prior to the settlement date.
Be aware of the 15% GST you will be charged on top of your commission costs. This is important to factor in so as not to be surprised or disappointed.
Good day, my name is Andrew Murray from the Apartment Specialists. Today, I'm talking about hidden costs in selling Auckland apartments that you need to be aware of.
You see when the owner comes to sell an apartment, they are given the cost i.e. commission and marketing. That's pretty much it. There are actually quite a few other costs involved and that can be really, really frustrating for an owner when they try to budget, figure out what they need to sell the apartment for and all those kinds of things. Nobody wants surprises.
So we have come up with basically five topics. One being pre-contractual disclosure or 418. Number two, being extra information on the apartment or complex. Three, lawyers fees. Four, being around rent income and missed rent income. And five, being GST and tax components which often aren't included or aren't thought about until after the fact.
Okay, I just thought I would go through things pretty quickly. Now, number one, pre-contractual disclosure. This is something that, as an agent, we cannot sell your apartment without. This is something that's only for either titles or apartments, which when you sell your apartment, it's basically saying "Have there been any issues? Have there been any claims maintenance?", that kind of thing about your apartment. This has been made compulsory since the Act came in in May 2010 - The New Zealand Titles Act.
The reason why it's compulsory is because too many purchasers were purchasing apartments without being aware of what they were purchasing. So you can understand it's very important. But it comes with a cost. This document is charged to you by the body corporate, and the fees range from - some don't charge anything and some up to about $350. Now, if you went with a specialist, they can actually create a 418 for you and give you all that information. And you can contact your body corporate but not actually have to pay that fee. But most agents won't do that. However, just ask us and we can help you with that. There's still a little work on your part but hey, you are saving $300.
Again, number two, extra information. Now, a lot of real estate agents who maybe don't specialise will need each information and will need body corporate minutes. Now, you may have a copy of them. You are often going to be charged for extra copies by the body corporate - $25 here and there, three of them for $75 right there. So that's often something the owners are not aware of. So you've got to include that in your budget.
Number three, lawyers fees. Be aware of conveyancing. It's what it is called when you sell your apartment. And re title, basically, it is being charged over to the purchaser, and that is around $1,000 including GST. Now, if you've got a mortgage on your property when you sell it, there's going to be an added component to lessen that mortgage which adds around about $300. So I'd probably budget around $1,300 for your conveyancing costs. So that's something that a lot of owners forget about. It's not something that I like to charge, but that is something that a lot of owners don't take into account when they are going to sell their apartment.
Number four, missed renter income. Often, a purchaser will want it to be vacant. This vacancy will happen, maybe a week, two weeks, three weeks before it actually settles. That's income that you were getting, and then all of sudden, you weren't. You may not have budgeted for that. Be aware that you may need to budget for a loss of rental income when you're selling your apartment, maybe for a couple of weeks. Generally, there's a change over. Often, it can be made so it doesn't occur. But it does happen, especially with people who don't specialise in apartments.
Now number five, it's not calculating the GST component. Now, obviously you have commission in selling your apartment. That's what we do, that's how we get our money, and how we get paid. But the commission amount is not just the commission amount. You've got GST. A GST component of 15% in New Zealand and then it gets added on to that commission amount. For example, let us say the commission is $11,500. It's approximately going to be just over $14,000. It's what you'll be charged. So, be aware of that GST component, and put that into the sum when calculating what the costs are when you're going to sell your apartment.
I hope that helps. Just to round it up again, make sure that you're aware that a pre-contract for disclosure is going to be needed and you'll get charged that around $350. Number two, extra promotion on your apartment, or complex, can range up to $100 if you're dealing with an agent who doesn't specialise in apartments. Number three, lawyers fees, about up to $1300 if you've got a mortgage, $1000 without. Number four, rental income and that change over, maybe one or two weeks. Number five, not calculating GST component on a commission when you've signed your property.
I hope that helps you get a full picture and gives you information, or allows you to form the information you need to figure out what's best for you moving forward.
Thank you and good day. Cheers!