Plan ahead for additional costs of buying and selling property which can escalate
WHETHER you’re buying or selling a property, there are always additional costs to be considered, says Mike Greeff, chief executive of Greeff Christie’s International Real Estate.
“It’s important to factor these extra costs into your calculations before concluding any transactions to avoid nasty or unaffordable surprises,” he says.
“Sellers are liable for a number of costs – these include: estate agent’s commission and possible capital gains tax. Sellers are also liable for the cost of bond cancellations on existing bonds. Even if your bond has a zero balance, it will still incur a cancellation fee of around R3 000 to R3 500,” says Greeff.
He says it’s also important to provide the bank with threemonths’ written notice of cancellation to avoid penalties.
Sellers must also ensure that rates and services bills are paid up and all arrears are settled. There is also a requirement for a 120-days-in-advance payment on rates and municipal services. Levy amounts owing to bodies corporate or homeowner’s associations must also be settled by sellers.
“Compliancy certificates are also for the sellers’ account. You need to ensure that the electrical, plumbing and gas installations in the property you’re planning to sell are in order. This can be costly, but it’s a vital step in the selling process,” says Greeff.
“A beetle inspection is also required in coastal areas. If an inspection reveals faults or non-compliancy, apart from the cost of the inspection, you will be required to pay for the requisite adjustments and repairs to bring the property up to a compliant level.”
Sellers are obliged to provide buyers with a certified copy of the title deed. If this has been lost, then the seller must pay for a replacement. The cost is R2 057 for a single deed.
“If sellers have agreed in the sale contract to carry out certain repairs, then they are also liable for the costs of those repairs,” says Greeff.
The buyers’ costs could include transfer duty, unless the seller is a VAT vendor and the sale is deemed to be part of the seller’s VATable enterprise. In the contract, the purchase price will be recorded as either including or excluding VAT.
“There may be a cost associated with obtaining a homeowner’s association consent to transfer, and this cost could be for the buyers’ account,” says Greeff.
Services may have been paid up by the seller, but the buyers will have to foot the bill for a rates clearance certificate, and in the case of a sec- tional-title transfer, the cost of a levy clearance certificate.
If the buyers are making use of a home loan, then there will be a cost to register the bond.
“The buyers will also bear the costs of any additional contracts such as a tripartite agreement, if applicable,” says Greeff. He says that if buyers intend to renovate or subdivide, there will be a cost related to a conveyancer’s certificate with regard to title restrictions.
In the case of the plans, buyers should try to ensure that the sellers give an undertaking to deliver copies of approved plans for the property. This should be noted in the agreement, or the costs could be for the buyers’ account.
“Finally, buyers should be aware of the potential costs of occupational rental, which sellers may charge if the buyers move in before transfer.”