Selling your home involves various costs, and you may get out of your sale less than what you expected. Do these costs apply to you?
*The original version of this article can be found on the Steeple website.
- Bond costs
Cancellation Costs
If you have an existing bond with a bank, you will be charged to cancel it when selling your house. This bond cancellation can cost you R3 000 or more. This is charged per bond and payable on transfer, so no advance cash payment is necessary.
Early Settlement Penalty
Consolidating your bond sooner than expected is going to cost you. Your bank may be entitled to charge you an “early settlement” fee if you are repaying a bond within 2 or 3 years (depending on the bank) of your property purchase. You would need to ask your bank how this penalty will be calculated if it is applicable to you.
Notice Period Penalty
While this may vary with different banks, most of them require a written notice 90 days in advance before you start consolidating your bond in full due to the expected property sale. Failing to supply this notice on time will entitle your bank to charge you with what is known as bond notice period penalty interest. Failing to notify them on time can make this fee a substantial, yet unnecessary, sum.
- It must be noted that once your notice has been given, your financial facility will be inaccessible.
The transfer process
The process of accepting the offer to purchase then registering the property into the buyer’s name takes approximately 2.5 to 3 months. Naturally, you may deem it necessary to only inform your back after the sale has been finalised, which could result in you being liable for a small fee of the penalty interest. If you will need money to pay any other fees in advance, it is advised that you withdraw this money before supplying your bank with your notice of cancellation.
- Agent’s commission and VAT
An estate agent charges commission on the sale of any property, and it is usually expressed as a VAT-exclusive percentage of the purchase price. This total is the seller’s responsibility to pay. The agency commission is likely to be the biggest cost by far, so selling independently as the owner can help with cancelling this cost.
- Compliance certificates
It is the seller’s responsibility to supply these to the buyer before the property is transferred. The purpose of compliance certificates is to ensure that any installations that could be deemed dangerous in the home are done conducted correctly. Each certificate costs at least R500, excluding the cost of any faults that are found during inspection. The compliance certificates, if applicable, are: electrical, beetle, electric fencing, gas, and plumbing certificates.
Electrical:
Valid for two years from the date of issue, the Electrical Certificate of Compliance or ECOC, is issued by a certified electrician. Should the property be fault free in this regard, the estimated cost can be anywhere between R500 and R1000.
- If the electrician does find faults, the cost will escalate depending on the amount work that needs to be done to ensure compliance.
Electrical Fence System Compliance Certificate:
Electrical Fence System Compliance Certificate is required where the homeowner has opted to install electrical fencing as a security measure.
- An ECOC and Electrical Fence System Compliance Certificate are not the same certificates and one does not provide compliance for the other.
Beetle (entomological)
This certificate is not compulsory, but to confirm that the wood in the property hasn’t been infested by beetles, it is an inspection to conduct especially if your home is along the coast. If your property is in the Western Cape and KwaZulu-Natal regions, you will generally need to provide the purchaser with a beetle-free certificate.
Gas
Many households have opted to have gas lines to supplement the use of electricity. With this comes the responsibility if ensuring that the gas lines are safe. If there are gas appliances in the house, homeowners will be required to obtain a certificate of conformity, which indicates that the installation has been done by a qualified technician.
Plumbing:
Currently only a requirement for homes in Cape Town, compliance certificate confirms that the plumbing is sound. These inspections cost at least R500 each, VAT-inclusive and if there is work needing to be done to achieve compliance, then the plumbing contractor will give a quote for it. This certificate does not confirm that the property is free from rising damp or that there are no blocked drains.
- Rates, taxes and levies clearance certificate
Rates and taxes:
The attorneys will require a rates and taxes clearance certificate from the local council, and you as the seller will need to put money upfront to obtain it. To provide the clearance certificate, the council can ask between 2 and 6 months of future-dated payments – quite a large amount if not anticipated. If the home is registered within a shorter time frame, the council will refund the seller the additional funds.
Levies:
In instances where the seller is in an estate or sectional title property, similarly to the rates and taxes clearance certificate, the homeowners’ association or body corporate may request that the seller pays for their levies a few months in advance to ensure these costs are covered until transfer takes place.
- Property Capital Gains Tax (CGT)
Capital Gains Tax, or CGT, 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.
- Moving costs
Costs of moving your furniture and possessions to a new property or to storage include the petrol costs and the possible cost of professional movers. These may vary depending on how many trips need to be made from A to B.
- Getting insurance for items being moved should be factored in.
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. Please feel free to contact Brian Kahn for further information or specific and detailed advice. Errors and omissions excepted (E&OE)