Beware of costs involved in selling your property
Bruce Swain
Sellers are often caught off-guard by the expenses incurred in the selling of a property. Just like there is no such thing as a free lunch, there is also no such thing as selling your property without incurring at least some costs.
“It is important to understand that there are a number of costs involved in selling a property, which the seller needs to plan and, in some cases, budget for,” explains Bruce Swain, CEO of Leapfrog Property Group.
The selling costs can be divided into five main categories, each of which include a number of costs that may or may not apply.
Bond costs
If you have a bond on the property, there will be a charge to cancelling the bond when you sell. The bond cancellation cost varies from but you can expect to pay upwards of R3 000 per bond, which is payable upon transfer.
Be sure to give the bank written notice, 90 days in advance or risk incurring a notice period penalty.
Compliance costs
These can be rather complex, and costly, but protects the seller in the long-term. Compliance certificates, which includes electrical, gas, plumbing, beetle and electric fence, are the seller’s responsibility and must all be in order before a property can be transferred. Budget for at least R1 000 per compliance certificate, excluding any potential damage or faults that the inspection could highlight and that would need to be fixed before the certificates are issued.
Agent commissions
The selling cost that is paid most grudgingly is the estate agent’s commission. This is usually a percentage of the purchase price, and is the seller’s responsibility to pay. “It is important to remember that the agent offers a professional service, which helps to sell a property faster and at the right price. The agent’s commission is the compensation for their knowledge, expertise and effort in securing the best deal – and experience – for all parties involved,” notes Swain.
Rates, taxes and levies
As part of the process of selling a propert,y the conveyancing attorneys will require a clearance certificate from the local authorities stating that all rates and taxes are fully paid. In some cases, the seller will be required to make future-dated payments for between two and six months in advance.
Similarly, if the home being sold is in an estate or a sectional title property, the homeowners’ association could require the seller to pay the levies a few months in advance to ensure all costs are covered while the property transfer is in process.
Other costs
A cost that does not apply in all cases but that certainly needs to be planned for is Capital Gains Tax (CGT), which is the tax payable on the disposal of an asset where the proceeds exceed the base cost. CGT is the responsibility of the seller and forms part of income tax.
Sellers are advised to consult an attorney or financial advisor in this regard.