What Are The Costs Involved When You Sell A Property?
1. Bond costs
Cancellation Costs: This is charged when you cancel your bond after selling your property. They total up to R3 000 or more.
Early Settlement Penalty: If your home was recently purchased and you are in the early years (approximately 3 years) of bond repayments, your bank is entitled to charge you an early settlement fee for consolidating your bond sooner than expected. Inquire this fee with your bank so that you are set for payment.
Notice Period Penalty: With so many other things to be concerned about, you are likely unaware of the need to notify the bank of your intent to sell. While this may vary with different banks, most of them require a written notice 90 days in advance before you start consolidating your bond. Failing to supply this notice on time will entitle your bank to charge you with penalty interest.
The transfer process: This process, from the date you accept a desirable offer to purchase to the registration of the home to the buyer’s name, can take anywhere between 2.5 and 3 months. In the case where you could need money from your bond to pay off any other financial obligations, then you should withdraw it before giving your notice of cancellation.
2. Agent’s commission and VAT
Estate agents charge commission on the sale of any property and it is usually expressed as a percentage of the purchase price + VAT.
3. Compliance certificates
Compliance certificates ensure that any installations that could be deemed dangerous in your home are done by a professional and done correctly. As a seller, it is your responsibility to ensure they are up to date before supplying them to the buyer. These certificates cost at least R500 each, but if there are faults discovered upon inspection, then you also have to pay for the necessary work to be done before the certificate can be issued.
Electrical: The Electrical Certificate of Compliance, also referred to as an ECOC, is valid for two years from the date of issue.
Electrical Fence System Compliance Certificate: Different from an ECOC, the Electrical Fence System Compliance Certificate is required for a home with electrical fencing as a security measure.
Beetle (entomological): While not compulsory, if the home you are selling is in the Western Cape or KwaZulu-Natal regions, you will generally need to provide the purchaser with certification. This certificate indicates that the property is free from beetle infestations.
Gas: To confirm that the gas lines in the home are safe, homeowners will be required to obtain a certificate of conformity, which indicates that the installation has been done by a qualified technician.
Plumbing: Currently a requirement for Cape Town, this certificate confirms that the plumbing on the property is sound. This certificate does not confirm that the property is free from rising damp or that there are no blocked drains.
• If the inspection results in work needing to be done to achieve compliance, then the contractor will give a quote for it.
4. Rates, taxes and levies clearance certificate
Rates and taxes: Attorneys will require a rates and taxes clearance certificate from the local council, and the seller will need to put money upfront to get this certificate. To provide the clearance certificate, the council can ask between 2 and 6 months of future-dated payments.
• 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.
Levies: In the instance where the seller is in an estate or sectional title property, the homeowners’ association or body corporate may request that the seller pays for their levies a few months in advance to ensure such costs are covered until transfer takes place.
5. Property Capital Gains Tax
This tax is not charged on all property, but if charged, it is taxable on the resale of property. This cost is the responsibility of the seller.
6. Moving costs
This is an inevitable part of moving from the sold property, and it is often not considered until the last minute. What must be considered here is how the move from point A to B will be made and this can also vary depending on how many trips need to be made. The costs to consider are the petrol costs and the possible cost of professional movers.
• Getting insurance for items being moved should be factored in.