Count the costs
Selling a property?
Sellers expect to pay commission to the estate agent who sells their home, but they also expect to make more from the sale than what is due to them, because they do not factor in all the costs that are incurred when a property is sold, says Cameron Jansen, the manager of RE/MAX Central.
“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,” he says.
Although the buyer pays many of the costs involved in a property sales transaction, there are a number of costs that the seller is responsible for, Jansen says. These costs include:
1. Bond cancellation costs
“One of the costs that sellers need to be aware of is the administration fees that are charged to cancel their existing bond account. Even if there is only one more repayment left on the bond account, a cancellation attorney will be used to cancel the bond. Generally, the bond cancellation fee will be between R3 000 and R4 000, which can be quite a shock if the seller is not expecting it,” Jansen says.
2. Rates and taxes
The attorneys dealing with the transfer of the property will require a rates and taxes clearance certificate from the local council. Hence the seller will have to pay upfront to get the certificate.
In order to provide the clearance certificate, the council can ask for between three and six months of future-dated payments, which can add up to a fair amount of money, Jansen says.
If the property is registered sooner than expected, the council will reimburse the seller accordingly. “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 be prepared to wait,” he says.
Where the property is in an estate or is sectional title, Jansen says the homeowners'' association or body corporate may ask the seller to pay his or her levies a few months in advance to ensure that these costs are covered until transfer takes place.
3. Compliance certificates
An Electrical Certificate of Compliance (ECOC) is valid two years only, Jansen says. “If the seller has an ECOC that is older than this, or any electrical alterations have occurred during the two-year period, the seller will be required to obtain a new one by enlisting the services of a certified electrician. Provided there are no faults found, this can cost between R500 and R1 000, depending on the size of the property and the call-out fee. If the electrician finds faults, the cost will escalate depending on the work that needs to be done to get the home compliant,” he says.
Additionally, if a homeowner has installed electrified fencing as a security measure, an Electrical Fence System Compliance Certificate is now also required, Jansen says.
“Note that an ECOC and Electrical Fence System Compliance Certificate are two separate and different documents,” he says.
Some households have gas lines installed to supplement their electricity usage. “These homeowners will be required to obtain a certificate of conformity which indicates that the installation has been done by a qualified technician.”
Sellers of properties in the Western Cape and KwaZulu-Natal will generally have to provide the buyer with a beetle-free certificate, he says.
“Usually, the beetle certificate is required only in respect of two types of borer beetles that have found their way to South African shores through imported timber. In certain cases, a beetle-free certificate will be required before the bank will grant finance to the buyer,” Jansen says.
Manage your expectations
Knowing what costs are involved in a property transaction will give you, as a seller, a more accurate picture of what you can expect to receive once the sale has been finalised, Jansen says.
“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.”
IOL
“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,” he says.
Although the buyer pays many of the costs involved in a property sales transaction, there are a number of costs that the seller is responsible for, Jansen says. These costs include:
1. Bond cancellation costs
“One of the costs that sellers need to be aware of is the administration fees that are charged to cancel their existing bond account. Even if there is only one more repayment left on the bond account, a cancellation attorney will be used to cancel the bond. Generally, the bond cancellation fee will be between R3 000 and R4 000, which can be quite a shock if the seller is not expecting it,” Jansen says.
2. Rates and taxes
The attorneys dealing with the transfer of the property will require a rates and taxes clearance certificate from the local council. Hence the seller will have to pay upfront to get the certificate.
In order to provide the clearance certificate, the council can ask for between three and six months of future-dated payments, which can add up to a fair amount of money, Jansen says.
If the property is registered sooner than expected, the council will reimburse the seller accordingly. “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 be prepared to wait,” he says.
Where the property is in an estate or is sectional title, Jansen says the homeowners'' association or body corporate may ask the seller to pay his or her levies a few months in advance to ensure that these costs are covered until transfer takes place.
3. Compliance certificates
An Electrical Certificate of Compliance (ECOC) is valid two years only, Jansen says. “If the seller has an ECOC that is older than this, or any electrical alterations have occurred during the two-year period, the seller will be required to obtain a new one by enlisting the services of a certified electrician. Provided there are no faults found, this can cost between R500 and R1 000, depending on the size of the property and the call-out fee. If the electrician finds faults, the cost will escalate depending on the work that needs to be done to get the home compliant,” he says.
Additionally, if a homeowner has installed electrified fencing as a security measure, an Electrical Fence System Compliance Certificate is now also required, Jansen says.
“Note that an ECOC and Electrical Fence System Compliance Certificate are two separate and different documents,” he says.
Some households have gas lines installed to supplement their electricity usage. “These homeowners will be required to obtain a certificate of conformity which indicates that the installation has been done by a qualified technician.”
Sellers of properties in the Western Cape and KwaZulu-Natal will generally have to provide the buyer with a beetle-free certificate, he says.
“Usually, the beetle certificate is required only in respect of two types of borer beetles that have found their way to South African shores through imported timber. In certain cases, a beetle-free certificate will be required before the bank will grant finance to the buyer,” Jansen says.
Manage your expectations
Knowing what costs are involved in a property transaction will give you, as a seller, a more accurate picture of what you can expect to receive once the sale has been finalised, Jansen says.
“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.”
IOL
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