The total cost of selling a property may only be a fraction of the sale price, but it can still be a considerable amount. You’ll often hear that there are ‘hidden costs’, which refers to the omitting of fees or charges, and other expenses. The truth is that the majority of these are actually not hidden at all! In fact, if represented by competent property conveyancers and agents, all the costs involved will be disclosed.
There are, however, additional costs that do not form part of the sale itself, such as moving costs, even repair work required to bring a property to 'sale condition’. Again, these are often referred to as ‘hidden costs’, but they are actually ‘unexpected’ or perhaps ‘unknown’ costs. This doesn’t mean that when doing a budget, a seller can’t estimate those.
In no particular order, these are the costs that sellers can expect to be liable for, from preparing the house for sale to moving from the property:
- Readying the house for sale: could include painting, landscaping, repairing cracks or even a major renovation of a room.
- Marketing costs: this aspect is usually taken care of by an estate agent, but if selling directly, will include photography and/or video’s, signage, marketing and advertising.
- Agent commission: Usually a percentage of the selling price, which in South Africa averages from three to 7,5%. Many agents are receptive to negotiation on their fee.
- Conveyancer fee: Legal fees due for the preparation of legal documents and to navigate through any legal issues that may arise. The Law Society of South Africa has provided a guideline of such fees.
- Bond cancellation fees: This includes settling any outstanding amounts and a discharge fee for closing the home loan.
- Builders insurance: This needs to be maintained until the property is transferred.
- Compliance costs: Certificates of compliance issued by electrical, gas, (and in some instances water and beetle infestation) evaluators. This cost does not include any repairs required to fix problems that the compliance officer highlights.
- Home inspection: Although not a legal requirement, it may be worthwhile to engage the services of a professional building inspector who can identify any problems that may hold up the issuance of clearance certificates.
- Rates, taxes and levies: Not only does the local municipal bill need to be settled, but the seller also needs to pay for anticipated usage of these services during transfer and possibly beyond until the purchaser is registered at the council.
- Capital Gains Tax: If the property being sold has been lived in for a minimum of two years, and is likely to deliver a R2-million gain or more, CGT is applicable. There are other conditions to note as described in this article by RE/MAX. Well, simply put, Capital Gains, an inheritance, gifts or donations.
- VAT: Only applicable should the property be owned by a VAT-registered entity.
- Moving costs, and associated insurance: This fee is dependent on distance and the quantity of goods to be relocated. It is considered a good idea to take out temporary insurance which will cover breakages during a move.
- Storage fee: If not immediately moving to another property, you may need to store your furniture in a storage facility.
- Temporary accommodation: This may be required while waiting for the readiness of the new home.
- New home expenses: It may be that plumbing needs to be moved to account for a washing machine, or additional hard and soft furnishings need to be purchased. Although these do not necessarily need to be included in the costs of selling, they may impact on the budget.
It is strongly advised that sellers should budget on the generous side. Also be aware of any penalties that may apply if failing to meet some of the legal requirements.