Buying or selling property is no doubt an engaging and tedious process involving lots of documentation and transactions. Beyond the buying or selling prices, there are numerous fees that you also have to foot throughout the process. Here is a look at some of the costs that you will most likely grapple with when it comes to the buying and selling of property.
Counting the Cost
There are lots of hidden and unanticipated costs that will crop up during the process and you will have to pay for these in cash. Knowing what these costs are will help you prepare adequately and meet the obligations as they arise.
Here is an overview of some of these costs.
- The Legal Fees: The legal fees can vary widely ranging from $1000 to $3000 depending on the nature of the transactions and complexity of the structure you are selling or buying. If the ownership structure of the building is simple, expect the fees to be lower. A more complex ownership structure will attract higher legal fees.
- The stamp duty: The stamp duty for real estate transactions varies from state to state. Check online to see the stamp duty for your state.
- Pest and building inspections: This is always a requisite requirement for all real estate transactions. The cost can vary from $300 to $700. Melbourne building inspections are especially necessary if you are buying an old home or commercial property inspections in Melbourne.
- Loan application fee or establishment fee: This is usually in the hundreds of dollars though it can vary from bank to bank. It is a one-off fee that the bank charges for your loan applications. In some loan packages, the loan application fee may be waived.
- The lender’s mortgage insurance: This refers to the insurance coverage for insuring the lender whenever they lend you more than 80% of the property value. This amount can vary from one insurer to another.
- The document preparation fees: This may come as part of the lender or legal fees and is usually in the hundreds of dollars. This fee may be charged even before the contract with your lender has been approved.
- The bank valuation fees: This is also in the hundreds of dollars and refers to the fee charged by the bank to arrange an independent property valuer that will carry out an assessment of the value of the property in question. There are banks that may waive this fee.
- Title insurance: The title insurance refers to insurance that you pay to protect your property title from any future claims. This, too, is generally in the hundreds of dollars.
- Council and Water Rates: Whenever you purchase a piece of property, you will need to pay certain water rates and council rates. The rates may vary depending on the location of the property.
- The registration of the title: When you purchase a piece of property, it has to be registered with the state government. The registration cost is typically about $75.
- The legal searches and inquiries: To ensure the property you are purchasing does not have any encumbrances, it is necessary to carry legal searches. There are other costs that you may have to grapple with depending on your unique situation. All these must be included in your budget when making plans to buy property.