In this article we are taking a look at what costs you need to keep in mind when selling a property. When selling immovable property, most of us just think about the Profit that’s coming back to our pockets, however there are more financial implications to be borne in mind. The following costs and expenses should be taken into consideration when selling a property:
- Agent’s commission: If you decided to let a traditional real estate agency assist you with advertising and finding a buyer for your property, the Agency is entitled to commission. As the Seller, you will need to agree on the commission amount that will be payable to the Agency, which is in most transactions a percentage of the Purchase Price, or even a set amount. This agreement needs to be contained in a Commission Agreement, signed by both the Seller and the Agent. Some agencies charge a flat rate-fee when selling a property and you will need to confirm what is included in such a fee to enable you to make an informed decision. Furthermore, is of the utmost importance to confirm whether the Agency is a registered VAT vendor and if so, whether the agreed percentage or amount includes or excludes VAT. Should Vat be excluded you will need to make provision for the agreed percentage or amount plus an additional amount of 15% .
- Conveyancers Fee: Should you opt not to make use of an Agent and should you require a Conveyancer to draft an Offer to Purchase on your behalf will be liable for cost pertaining to the drafting of such an Offer to Purchase.
- Bond cancellation: Should there still be a current mortgage bond registered over the Property, the bond will have to be cancelled simultaneously with the transfer. The Conveyancers attending to your transfer will request cancellation settlement figures from the Bank, whereafter the Bank will appoint attorneys to attend to the cancellation of the said bond. It is important to take note that there are cancellation costs payable to these attorneys representing the Bank and who will attend to the cancellation of your bond in the Deeds Office. Apart from the Attorneys costs, the outstanding Bond amount together with interest calculated thereon until cancellation will be deducted from the Purchase Price. In this regard, Sellers can save costs informing the Bank that the property is being sold and that the bond is being cancelled, as soon as the property is listed. This is due to the fact that the Banks require at least 90 days’ notice for the intended cancellation of a bond, otherwise penalty fees will be payable by the Seller.
- Compliance Certificates: These include, but is not limited to the Electrical Certificate of Compliance (COC), Gas Compliance Certificate, Electric Fence installation certificate, and costs to obtain these certificates can vary depending on the amount of work required to ensure that the Property is compliant. Different provinces require different additional certificates such as Entomologist Certificates, Borehole Certificates and Water/ Plumbing Certificates. Also, keep in mind that all these certificates are only valid for a certain period and you must therefore ensure that it is valid at date of registration of the property into the Purchaser’s name.
- Municipality clearance figures: The Conveyancers will apply for rates clearance figures from the Municipality and as the Seller, you will be liable to pay these issued figures in order to obtain a clearance certificate that gets lodged in the Deeds Office together with the Transfer documents. Most of the Municipalities requires payment in advance for at least three months to ensure that there are no outstanding amounts on date of registration. On registration and when you close your Municipal account, you apply for a refund from the Municipality for any amounts paid by you after the property has been registered into the Purchaser’s name.
- Relocation costs and administration: Moving trucks, breakages, the administration regarding informing people of your change of address, and taking days off work to coordinate the move should also be considered. Poor planning when moving can add to your stress levels significantly, but can be avoided with proper preparation.
- Sectional title clearance figures from the Body Corporate (for sectional title units): As with the Municipality, all Levy Figures need to be paid up until registration to the Body Corporate or their Managing Agent. The Conveyancer will request levy clearance figures payable in advance. On registration a pro rata calculation will be done and the Seller will only be liable for Levies payable until date of registration, unless otherwise agreed to in the Offer to Purchase. Home Owners Association
Should there be a Home Owners Association appointed over the property, they will also require their levy figures to be paid in advance before they will consent to the transfer, which consent has to be lodged in the Deeds Office.
- Building Plans: It is important to confirm whether updated and approved building plans exist for you property. If so, this can be delivered to the Purchaser on request. If not, it is a necessity to specify this in the Offer to Purchase and to clearly confirm which party will be liable for all costs pertaining to the obtaining of such Building Plans. In some instances, the Banks insist on building plans to be delivered before they can allow the Bond of your potential buyers to register in the Deeds Office. It is therefore imperative to ensure that the Offer to Purchase truly reflect your intention regarding building plans, obtaining these building plans and costs relating thereto.
- Original Title Deed: The Original Title Deed of a property being transferred must be lodged in the Deeds Office together with the transfer documents. Should there be no bonds registered over such Property the Original Title Deed should be in the possession of the Seller. If such an Original have been lost or destroyed a new copy has to be obtained from the Deeds Office which leads to further cost to replace that Lost Deed. An advert has to be placed in a News Paper, the Attorneys requires an additional fee for the drafting of an application to replace the lost Deed and the Deeds Office also has an additional fee to issue such a copy for use in the Deeds Office.
The abovementioned is not a closed list and some of the costs are avoidable if one takes time to do proper planning when selling a property. Another factor that may influence the abovementioned costs and expenses is the time period within which the transaction registers and any delays or frustrations may once again be avoided with proper planning and preparation. For well-reasoned and professional advice, please do not hesitate to contact us.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.