Man sells his home for over $600,000 but operators take over $205,000 of the fee as costs charged
The family of a man who sold his home for more than $600,000 were left shocked and confused when operators took $205,000 of the sale.
The son of the man who had owned the home was left searching for answers after the sale went through last year, about a decade after he and his then-partner first purchased the property in Australia.
The home was located in a retirement unit in the western suburbs, where the man lived up until he was moved into aged care last year.
Advert
At that time the unit was handed back to the operators to sell, but it required some repairs and a 'general refurbishment' before doing so.
In a submission to columnist Nick Bruining at the Australian publisher The Nightly, the son explained that the unit then sold for $604,331 ($910,000 AUD) - an increase to the original price of $571,074 that his dad paid a decade earlier.
This could have been a nice profit for the father, but the family were left shocked when the operators of the retirement village then took a huge chunk of the sale price.
The son said they were 'devastated' to see more than $205,812 go to the operators, so much so that they questioned whether the huge amount taken was even 'legal'.
Unfortunately, however, Bruining confirmed that not only was it legal, but it was also quite common.
He explained: "It is crucial for anyone entering a retirement village to fully understand some basic concepts behind the transaction before signing up."
Unlike the real estate investment of buying a standard home, Bruining pointed out that buying a unit in a retirement village essentially involves buying 'the right to live in a room' owned by the operators.
He explained that operators often include a management fee in contracts for buyers, which is charged monthly and accumulates each month.
"The total is deducted from the sale price when the accommodation is vacated and on-sold," he explained.
As a result, the more time spent in the unit, the bigger the fee.
Additional costs may accrue through other exit fees, as well as a non-negotiable rate of commission often included for the sales agent if the seller is required to use the operator’s agent.
Bruining pointed out that these mounting costs could be so high that it may impact a seller's ability to fund aged care later down the line - highlighting the importance of taking the contractual obligations and additional costs into consideration before buying.
Emily Brown