Personal Finance

Selling Property: The Costs You Need to Keep in Mind

Are you planning on selling your home? Maybe you want a better house or are relocating to a new city. Whatever the case may be, putting your house on the market and negotiating with potential buyers can seem like quite a daunting task. What a lot of people overlook is that selling property can be pretty costly. Considering that this may be your largest asset, you will want to handle this in the best way possible to make it less complicated. The following are some costs that you may want to keep in mind and start saving for

Estate Agent Commission
Unless you can sell the property yourself, you may want to use the service of an estate agent. Agents have the expertise to target the right buyers, pitch the property to them, and advertise it through the proper channels. They can also advise on other factors like inspection and legal issues. There is no standard fee for paying an agent; however, it can range between 5% to 7% of the selling price, excluding VAT. You could probably negotiate this cost with them. Note, if you are using an agent, they should be the ones who cover the advertising costs, and not you.

Property Inspection
Before you start putting your property on the market, you will have to go through a series of inspections which is another cost of the service of these registered professionals. Having checks will benefit you, improving your property's condition and strengthening your negotiating position. If any latent defects are present, the inspector may ask you to fix them before issuing you a compliance certificate.

Compliance Certificates
As a property seller, you will need to have several compliance certificates that confirm that your property is in good condition to be sold. Certificates can be issued for internal electrical work, external electric fence, water installation, plumbing, gas, etc. Each certificate has a cost, but obviously, you will only be inspected on what applies to your property. These clearance certificates will be required by the conveyancers. If the property transfer is registered within a shorter time frame, the seller will be able to apply for a refund from the municipality for the difference.

Bond Cancellation Fees and Penalties
If your bond has not been paid in full, you will be charged for canceling, and you could receive a penalty if you do not inform the bank in due time. The bond cancellation cost varies from bank to bank; however, most banks may charge R3,000 upwards. As for the penalty, you have a 90-day notice period to file your bond cancellation. If you are late, you can expect to receive a "bond notice period penalty." The bond cancellation process is complete once the property is sold, so your bond will run up until that date, and you will have to pay the final amount of that period up until that date. To make this easier for you, put in your written notice to the bank before you start placing your property on the market.

Capital Gains Tax
As the seller, you may be exempt from capital gains tax on the sale of property in your primary residence where the gain/loss is not more than R 2 million. If you sell a second or third property where you do not reside, you will be liable to declare any capital gain to SARS and pay the tax on that gain.

Other costs you may want to consider could be a home-owners consent, a certified copy of misplaced title deeds, moving costs, any special levies, and additional rates and taxes. These need to be complete before the offer to purchase and transferral of property. By understanding this, you have a clearer picture that selling a house may take months of preparation before the actual sale is made. Be sure to speak to a professional to know what the exact figures for your property are and how much you may need to save. Don't think about it as losing money because afterward, you will have a nice boost in your bank account for your next big asset purchase.

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