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New Zealand - Selling Property
The other way to sell a property is privately. This is actually a popular choice in New Zealand and one that is done for many reasons. The main reason and perhaps the most obvious is that when a vendor sells their home privately there are no fees to the estate agent. Of course they are then responsible for their own advertising costs but depending on the value of the home they can still be making huge savings.
The vendor also has full control of the sale of their property if they decide to sell privately. This means that any negotiation on price with potential buyers can be done directly which also helps to save time. The vendor is also the best person to describe the house to potential buyers as they are the ones who have lived in it. They can highlight the good points better than an estate agent who might not know certain details about the home.
Some vendors choose this option as they believe that estate agents will not give their full attention to selling their home. They have so many other homes on offer that as long as they make a sale they don’t care whose house it is. But to choose this option a vendor must also know how to sell a home.
Estate agents in New Zealand usually charge a fee of 3.95% of the sales value of the home. On top of this is the GST (Goods and Services Tax), which can take the total fee to 4.44%. Homes over $350,000 are usually charges at a lower fee of around 2% plus the GST. However, as the estate agent is paid half of the fee in commission with the rest going to the agency then successfully negotiating on these fees is very rare. In addition to these fees there is usually an admin fee of $500.00 which is a fixed fee no matter what the value of the home. To put this into perspective, if your home sells for $250,000 you are likely to be paying around $11,600 in estate agents fees. You will pay this price if your home sells within a few days or even if it takes months.
The good news is, this fee usually comes out of the buyer’s deposit. The buyer has to pay a minimum of 10% deposit and the estate agent takes their fee once the home sale is going through. The vendor only sees this figure once the solicitor shows the statement of sale to the vendor after the sale has completed.
The costs for the vendor selling the home privately are considerably less, even taking into account the advertising costs, which today thanks to the internet can be very low. However, any costs accrued by advertising the home privately, putting up boards and printing flyers usually need to be paid up front. It is not normally possible to pay these fees after the sale of the home has gone through.
There is no capital gains tax to pay not even for foreign investors, but if you are leaving New Zealand to go to another country, for example back to your home country or to emigrate elsewhere, then there may be the need to declare the money upon your arrival in the new country. Checking with the customs office of the destination country regarding the amount of money that can be brought in with you is wise prior to making the move.
Property exchange in New Zealand is possible although it is not a common way to acquire a new home. Some people consider this option if they are struggling to sell their house, or if they are lucky enough to find someone who is looking for a home in their area, while having a home available in the area the vendor wants to be. However those that are not that lucky would usually consider renting their home until they find a buyer rather than going through the house exchange process.
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