THE COST OF SELLING A HOUSE IN SOUTH AFRIKA
Category Property Ownership
Selling a house may incur several costs but keep your eye on the prize. Remember that once the process is over, you could be left with the resources you need to buy a new home, or whatever else you intend to do.
We lay out these home seller costs in more detail so that you won't be caught off guard.
1. Bond cancellation
Among the legal costs for selling a home in South Africa is the cost of bond cancellation, which is carried out by the bond attorney appointed by the bank.
Some costs attached to the bond cancellation process for sellers include:
- A penalty fee if you failed to provide 90 days' written notice to the bank of your intention to sell the home. Therefore, it's best to provide notice to your bank before putting your home on the market. Remember to give notice again should the sale takes longer than 90 days to materialise.
- A penalty if you are cancelling the bond two years or less into the 20- or 30-year loan period.
- Homeowners' and life insurance premiums that would have been debited to the bond account within the next six months (to ensure the insurance remains in place until the home selling process is complete).
2. Rates, taxes and levies
The Seller must pay upfront three to six months' worth of rates and taxes to the local council, and/or levies to the Body Corporate, to ensure those costs are covered until registration of transfer takes place. The seller must provide the attorney a certificate proving that the property is covered for these costs.
Should the bond registered into the buyer's name earlier than expected, the local council will refund any excess paid by the seller.
3. Compliance certificates
The Seller must obtain compliance certificates for electricity, gas, etc by hiring qualified and registered professionals to perform an inspection and ensure everything is in working order. Compliance certificates required could include:
- Electrical: The Electrical Certificate of Compliance (ECOC) ensures that the electrical work done on the property conforms to regulations stipulated by South African National Standards.
- Electric fence: If you have an electric fence installed, it requires a separate certificate from the Electrical Certificate of Compliance, as it falls under different regulations that apply to electrical machinery.
- Water installation: This compliance certificate ensures all is in order with the property's water system, including the water meter and cisterns. It is not the same as a plumbing certificate and doesn't cover the same elements.
- Plumbing certificate: This is to certify that the plumbing work complies with all the regulatory installation requirements.
- Gas: The Gas Certificate of Conformity is to ensure the gas systems are in working order.
- Beetle Certificate: This is to ensure the property is free of wood borer beetles that can damage the structure. (Not required in all provinces).
Costs can range from about R400 to R1 000 per certificate, and perhaps more if the inspection reveals faults. It is wise to budget about R5 000 for any repair work required.
4. Estate agent's commission
Obviously, if you've employed an estate agent you must pay their professional fee. It is always advisable. as selling a home privately introduces several challenges.
Estate agent's fees are 5 to 7% in commission, but are worth every penny when considering their expertise and ability to barter a higher price on your home.
5. Repairs and maintenance
A home inspection will often be required as part of the offer to purchase it will be the responsibility of the seller to arrange the inspection and pay for required repairs.
Arranging a home inspection before even putting your house on the market may seem unnecessary, but it can be of benefit to have your home in tip-top condition as it will improve the home's value and strengthen your negotiating position, as opposed to having latent defects revealed during an inspection requested by the buyer.
Once the deal is closed, the documents signed, the legal procedures complete and so on; the equity in your home (that being the portion of the home loan you have already paid off) is paid to you by the transferring attorney, usually by electronic transfer into your bank account. A wire transfer means the funds will usually be in your bank account within 24 to 48 hours.
Author: ooba Staff Writer
