Homeseller's Checklist: Expenses to Expect When Selling Your Home
Selling your home can be a costly affair, a fact that sellers are often unaware off.
Sellers generally expect to get more out of the sale of their property than they actually do. This is because they forget to factor in a number of smaller costs which are associated with selling a home.
Often sellers take into consideration the balance on their bond and the estate agent’s commission, but very little else. However, there are several other costs that need to be taken into account when determining the final amount that the seller will receive after the conclusion of the sale.
These additional expenses include:
1. Administration fees
Selling your home involves the process of cancelling your existing bond. To terminate your bond, a cancellation attorney is required – even in the instance where there is only one more repayment left on the bond account.
An administration fee is payable for the completion of the bond cancellation, which is generally a fee between R3000 and R4000.
2. Clearance certificates required:
- Rates and Taxes Clearance Certificates
In addition to the bond cancellation process, a Rates and Taxes Clearance Certificate from local authority is also required. This certificate is to confirm that the property’s rates and taxes aren’t in arrears. According to Jansen, it is the seller’s responsibility to fit the bill for the clearance certificate upfront.
Obtaining the certificate can be an expensive task, as the council can ask between three and six months of future dated payments which can add up to a large sum of money.
If the home happens to be registered within a shorter time frame, the council will pay back the additional money which the seller has paid. However, this does take some time. In some cases, sellers have only received the money owed to them by the council a year after the date of sale – so they will need to be prepared to wait.
For homeowners in a sectional title scheme or living in a gated estate, obtaining a Rates and Taxes Clearance Certificate is a similar process. The homeowner’s association or body corporate, can ask sellers to pay for their levies a few months in advance, to ensure that the costs are covered until the home transfer takes place.
- Electrical Certificate of Compliance
Obtaining your home’s Electrical Certificate of Compliance or ECOC is another cost which sellers’ need to be mindful of.
In accordance to South Africa’s current legislation, an ECOC is only valid for a period of two years. Should the ECOC be older than two years and/or if electrical alterations were made to the property during the two-year period, then the seller is required to obtain a new ECOC.
This can be done by enlisting the services of a certified electrician which can cost anywhere from R500 to R1000, depending on the size of the property as well as the call out fee payable.
In the event that there are electrical faults found, the cost can escalate depending on the work that needs to be done to get the home compliant.
- Electrical Fence System Compliance Certificates
In addition to an ECOC, an Electrical Fence System Compliance Certificate is also a requirement if the homeowner has installed electrical fencing as a security measure on his/her property.
According to Jansen is vital to note that an ECOC and Electrical Fence System Compliance Certificate are two separate documents.
- Certificates of Conformity
For homeowners who have installed gas lines to supplement their electricity usage, a Certificate of Conformity which indicates that the installation has been done by a qualified technician is also mandatory.
3. Beetle Infestation Clearance Certificates
While not compulsory, homeowners who are selling their property in the Western Cape and KwaZulu-Natal regions will generally need to provide the purchaser with a beetle-free certificate. Usually the beetle certificate is required only in respect of two types of borer beetles that have found their way to South Africa shores through imported timber. In certain cases, a beetle-free certificate will be required before the bank will grant finance to the buyer.
4. Home Inspections
Some sellers may decide to have a home inspection conducted in order to identify any issues before placing their home on the market. Although it is not a commonplace, a home inspection could cost you around R3500, depending on the service provider.
In the case where a homeowner has sold their property for R1 million, even if they had the entire equity of R1 million in the property, after all costs have been taken off they could probably expect to walk away with a figure fractionally over R900 000, dependent on the commission charged. Knowing what costs are involved in a property transaction will give sellers a far more accurate picture of what they can expect to get once the sale has been finalised.