The hidden costs when selling your property
Category Property Advice
The selling of your property is a personal endeavor. It can be emotional and incredibly stressful, but it's important to go into it with your eyes wide open and to be aware of the hidden costs attached to the sale.
Once an offer has been accepted, it is not as simple as picking up the cheque and moving on. There are a number of costs that need to be considered before you can hand the keys over to the buyer.
Bond cancellation fee:
If you still have a bond on your property, you will need to contact the bank to cancel it. And regardless of how much you have left on your repayments, you will be charged a cancellation fee. The amount generally falls between R3000 to R4000. Not huge in the greater scheme of things, but this can often come as a shock to the seller. It is also important to note that you need to give the bank a 90-day notice period on your bond cancellation or you will be charged with a penalty for early cancellation. If the property does not sell within the 90-day period, you will need to give notice again.
Compliance, compliance, compliance:
Before a transfer can be registered, the seller needs to provide compliance certificates for electrical, plumbing, gas, and in some cases, beetle (for wooden floors) and electric fence certificates. Fortunately, there are companies now that can provide the full service and ensure all the necessary requirements have been met in your property.
Unfortunately, there are often costs involved should anything be non-compliant. The by-laws governing compliance can change quite frequently and sellers should try stay up to date with the current laws to ensure they do not get caught out. Repairs can often become costly and you need to take this into account when selling.
Pay up those rates:
You will need to provide the attorneys with a rates and taxes clearance certificate before you can proceed with the sale. The seller will need to pay the local council up-front to get the certificate and often you will need to provide three-to-six months-worth of future-dated payments. If you are due a refund, the council will reimburse you, but this can take months and the costs will need to be taken into account.
Occupational rent:
Should the seller not be able to leave the property upon the agreed transfer date, they will need to pay the new owners occupational rent for the time they remain on the property. This amount needs to be agreed upon in the sale agreement. Should you be selling and moving into a newly purchased property, it is often advised that the same legal representatives handle both transfers to try and ensure the dates match. Occupational rent can prove costly, particularly, if you are facing bond repayments, so be pragmatic - and realistic - when agreeing on date of transfer.
Moving costs:
While it may sound obvious, the costs associated with the actual move can add up quickly. Do your homework beforehand to ensure you hire a cost-effective moving company. It is also worthwhile considering what will be needed at your new property in terms of installations or any other unwanted surprises.
Capital Gains Tax:
Last, but certainly not least, if you sell your property at a profit, you will need to pay capital gains tax. The first R2 000 000 of the profit made on the sale or your 'primary residence' cannot be taxed. Just make sure you do your sums beforehand so that you can plan accordingly.
Transfer Duty
It is the responsibility of the buyer to pay the transfer duties and the legal fees attributed to the transfer, but should you be purchasing a new property when selling your own, make sure you incorporate these costs into your final selling price. Many sellers do not consider this when doing their homework and it can come as a nasty shock when they get hit with the costs for the new property.
If you would like to work out bond and transfer costs, bond affordability or bond repayments then head over to our calculator tool HERE! For any property related queries or advice, feel free to give us a call and we would be more than happy to assist.
Author: The Agency Property Group
