Cost of selling

When it comes to selling a property it is easy to overlook the fact that the seller will also incur costs. 

"Sellers never like to hear that the sale of their property will see them incurring expenses, and understandably so. But having a clear idea of what costs to expect and how much it is likely to be does allow for better planning," says Silvana Dos Reis Marques, Principal at Leapfrog Pretoria East. 

Not all costs will apply to all sellers, but the main ones to be aware of include the following: 

1. Bond cancellation 

When a property that has a bond on it is sold, the seller can expect to pay a bond cancellation fee, which can be upwards of R5000*. 

The first step is to notify your bank of your intention to cancel the bond. Do this at least 90 days in advance. The bank will calculate the cancellation amount and appoint an attorney to manage the cancellation.  

According to a spokesperson from FNB Home Finance and Private Bank Lending, quoted in this article, the cancellation is not due to the bank but rather to the attorney appointed to handle the cancellation of the bond at the Deeds Office. As such, the cost is made up of the attorney's remuneration fee and the fee payable to the Deeds Office for cancelling the bond. 

"The best thing to do is to get in touch with your bank as soon as possible, as processes may vary at different institutions. A property advisor will also be able to assist you in understanding exactly how the process will play out and how much you can expect to pay," Dos Reis Marques explains

2. Compliance certificates 

The seller of a property is legally obliged to produce compliance certificates before the property transfer can take place. 

Compliance certificates serve as proof that the property is legally fit for sale, and that things like electric fencing have been inspected and approved by a registered professional. 

The following compliance certificates are compulsory for sellers to obtain - at their expense:

• Electrical certificate of compliance

• Electric fence certificate

• Water installation certificate 

• Gas certificate of compliance 

• Beetle-free certificate 

Properties with solar power installations also need to produce proof that the system was installed by a registered professional and comply with the various regulations.

Sellers should budget for at least R2000* per certificate, as well as costs that may be incurred to rectify any issues identified in the compliance process. 

"Ultimately, compliance certificates protect the seller in a sale and should be viewed as such, rather than a grudge purchase," Dos Reis Marques advises.

3. Rates, taxes and levies

The transfer of a property from one owner to another (from seller to buyer) requires a clearance certificate from the municipal authorities confirming that all rates and taxes are fully paid up. 

The seller may be required to make future-dated payments for between two and six months in advance.The amount will be an approximation based on past accounts, and can be a large sum. Sellers are advised to budget for this expense as it can be quite a sizable amount. 

4. Agent commission 

The property agent managing the sale of the property is there to provide a professional service and must be remunerated accordingly. The commission an agent earns on the sale of a property is for the seller's account and is calculated as a percentage of the purchase price of the property.

The service rendered by an agent to the seller goes beyond merely marketing the property,  but includes access to their expert knowledge of the property sector, dynamic market insights and helping to secure the most favourable deal for both buyer and seller. 

"A property professional should have no problem explaining their commission structure upfront so don't hesitate to ask about it," Dos Reis Marques points out. 

5. Miscellaneous costs 

If it applies, Capital Gains Tax (CGT) - the tax payable on the disposal of an asset (your property) where the proceeds exceed the base cost - should be planned for. CGT is the responsibility of the seller and forms part of income tax payable to SARS. 

"Consider speaking to a financial advisor if CGT is payable on your property. Your property advisor will definitely also be able to offer advice and/or direct you to the relevant person for further support," Dos Reis Marques says. 

Last but not least, the physical costs of moving should also be considered. The distance of the move and the amount of things that need to be moved will determine the cost, but whether you're using professional movers or doing it yourself (consider the cost of your own time), there will be a fee attached to it so plan accordingly. 

* Please note that costs mentioned here are estimates - property sellers are advised to check costs with relevant bodies and organisations.