NSW real estate market: How buy now, pay later can make you extra money when selling

NSW vendors are getting a better price on selling their homes with a new way to make fast cash. Search the list and see how it affects your suburb.

NSW home sellers are spending thousands of dollars through buy now, pay later providers to help sell their properties — and yield a better price.

Mindful that first impressions count, owners are borrowing as much as $35,000 to cover last-minute home improvements and marketing costs.

Property experts say if sellers don’t have the money upfront to gussy up their homes before listing them, using the services to make small improvements could help them exceed their price expectations.

However, choosing to pay later isn’t without risk. Not only are there extra charges involved to access the service, and there are time limits in which the property must be sold in order to avoid late fees and other penalties.

Pay later provider Campaign Agent said its VPAPay product had been most popular with vendors in Wollongong.

Sellers in Figtree, Lane Cove, Cessnock, Fairy Meadow, Greenacre, Manly, Bexley, Ryde, and San Souci were also often choosing to defer payments.

Spending a modest sum on minor home improvements before selling could help yield a better price. Picture: NCA NewsWire / Gaye Gerard

Campaign Agent CEO Shaun Moriarty said more than 50 per cent of vendors chose to pay later.

Mr Moriarty said vendors were typically spending about $5000 on property marketing, but the service could be used for other expenses that are connected to a sales campaign, such as property styling and minor improvements.

A seller can borrow up to 1.5 per cent of their home’s estimated sale price, so if they were expecting to make $500,000, they could borrow as much as $7500.

Another 5.9 per cent ($442 in this example) is charged on top of that to use the product.

The amount must be paid back when the deposit is released, upon settlement, when the agent’s sales authority ends, or at the end of the designated pay later date.

Vendors are charged $5 every 30 days it is overdue, capped at 0.1 per cent of the pay later amount.

If the property is withdrawn from sale, the outstanding amount must be paid within 7 days of receiving an invoice.

VPAPay also reserves the right to play a caveat on the property in the event of non-payment.

Rival offering ListReady offers up to $35,000 to pay for similar costs and claims it has seen its “biggest few months” since it launched in 2019.

In order to access its pay later option, vendors are charged an additional four per cent on top of the amount they have spent, and the total cost is payable upon settlement or 60 days from application, whichever is earlier.

A 1.3 per cent monthly fee applies if payment is outstanding after 60 days.

MoneyMe, ListReady and RentReady national sales manager, Julian Antonescu said vendors of all property categories were using the service.

He said those who had used the service in Sydney, Brisbane, Melbourne and Adelaide’s inner suburbs typically spent anywhere between $4000 and $15,000.

“The most common expenses that are covered are marketing, styling and staging, and property improvements such as painting and landscaping,” he said.

Advantage Property Consulting director Frank Valentic said if a vendor did not have the money upfront to fix up or style their home, using a buy now, pay later provider was worth considering. Picture: Supplied

Canstar finance expert Steve Mickenbecker using buy now, pay later to sell a home was an expensive option, but was worthwhile if the only other option was a “substandard marketing program” that could hurt the sale price.

“If the sale or settlement becomes protracted then the cost of buy now, pay later will escalate,” Mr Mickenbecker said.

“If a buyer can’t be found then the vendor’s stress will likely be aggravated by having to otherwise find the money to repay it.”

Advantage Property Consulting director Frank Valentic said if a vendor did not have the money upfront to fix up or style their home, using a buy now, pay later provider was worth considering.

Mr Valentic said sellers could get “$50,000 to $100,000 more” for their property if they spent $5000 to $10,000 on improvements.

“Presentation is key in the current market because owner-occupiers are very active and they buy on emotion,” Mr Valentic said.

Buyer’s advocate Emily Wallace said buyers often struggled to visualise improvements, and making small improvements “definitely adds value to a home”

“But vendors shouldn’t overcapitalise. Buyers are drawn to a property that has its floors updated, a fresh coat of paint, landscaping in shape, and fixtures up to date,” Ms Wallace said.

Originally published as NSW real estate market: How buy now, pay later can make you extra money when selling