Selling your property? Be sure to take these 5 costs into account

Selling your property? Be sure to take these 5 costs into account
Selling your property? Be sure to take these 5 costs into account

When the time comes to sell, property owners are often caught off-guard by the expenses that are associated with selling property.

"While the bulk of the cost associated with property transactions are for the buyer's account, the seller will incur at last some costs," explains Giel Viljoen, Principal at Leapfrog Stellenbosch.

Make sure to take the following into account and budget accordingly.

Bond cancellation costs

If you have a bond on the property you're selling, there is likely to be a cost for cancelling the bond. The cost varies from bank to bank but prepare to pay in excess of $4000. 

The seller needs to give the bank written notice 90 days in advance before consolidating the bond in full as a result of sale, or risk incurring a notice period penalty. Failing to provide notice in good time will result in bond notice period penalty interest, which is a significant but avoidable expense.

In some cases the transfer process may also incur costs for the seller, but that only really happens if the sale of the property is finalised before the bank is notified, which then results in penalty interest.

"If you need to settle other fees with the money available in your bond to do so before issuing the bank with notice of bond cancellation.” Giel Viljoen, Principal at Leapfrog Stellenbosch

Compliance costs

Compliance certificates (which includes electrical, gas, plumbing, beetle and electric fences) are the seller's responsibility and must all be in order before a property can be transferred. Also note that the cost of the certificate does not include the costs of anything that needs to be fixed or repaired, based on the findings of the inspection.

Agent commission

The agent's commission is the seller's responsibility to pay and is usually calculated as a percentage of the purchase price of the property. 

"We often hear complaints about this 'cost' but bear in mind that the agent renders a professional service and the commission is compensation for their work in ensuring the transaction offers the best deal to both the buyer and the seller." 

Giel Viljoen, Principal at Leapfrog Stellenbosch

Rates, taxes and levies

As part of the process of selling a property the conveyancing attorneys will require a clearance certificate from the local authorities stating that all rates and taxes are fully paid. In some cases, the seller will be required to make future-dated payments of between two and six months in advance. The amount will be an approximation based on past accounts, and can be rather a large sum for the seller so it is useful to plan and budget accordingly when you decide to put your property on the market. If, however, the property is registered to the buyer in a shorter time frame the council will refund the seller.

Similarly, if the place being sold is in an estate or a sectional title property, the homeowners' association could require the seller to pay the levies a few months in advance to ensure all costs are covered while the property transfer is in process.

Miscellaneous costs

A cost that does not apply in all cases but that certainly needs to be planned for if it does is Capital Gains Tax (CGT), which is the tax payable on the disposal of an asset (your property) where the proceeds exceed the base cost. CGT is the responsibility of the seller and forms part of income tax.

Lastly, don't forget to take the cost of moving your things from one property to another into account. Moving costs tend to be more flexible as it depends on factors, including how far you're going, but should still be planned for.

Delia de Villiers

Delia de Villiers

Senior Account Manager at Irvine Partners Public Relations & Integrated Marketing Agency.

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