Real estate agent’s commission is often one of the first cost considerations sellers think about when it comes to selling their homes, but there are others that sellers and buyers need to keep in mind.
Besides an agent’s commission, which is usually set between 6% and 8% plus VAT of the selling price, Trevor Sturgess, Seeff Kibler Park managing director, says sellers will also need to pay the following costs:
Bond cancellation: This is the cancellation fee payable to the bond attorneys representing the bank that is used. Sellers can save costs by letting the bank know the property is for sale as soon as the property is listed.
Compliance certificates: These include the Electrical Certificate of Compliance (COC) and can cost anything from R1200 upwards, depending on the amount of work that is needed. Also keep in mind that an electrical COC expires after two years.
Another certificate the seller is required to provide is an Electric Fence Certificate. This costs around R2000 or more, depending on any work that needs to be done. If you received a certificate when the electric fence was installed this will suffice.
A Plumbing Certificate and Beetle Certificate are also required in some instances. These are to ensure the plumbing is in order and there are no insect infestations in the home.
Municipal costs: As the seller you will need to pay around four months extra on your rates and services. You can, however, claim back a portion of this after the property has been sold.
Relocation costs and administration: Moving vehicles, breakages, the administration of informing people about your change of address and taking days off work to co-ordinate the move should also be considered.
Furthermore, moving can add to your stress levels. Sectional title clearance figures from the body corporate (for sectional title units) This could be a special levy which needs to be fully paid before the body corporate will issue a clearance certificate.
Sturgess says the costs that need to be covered by buyers include:
Transfer costs to the transferring attorney
Transfer Duty This is a tax to the government on properties valued at more than R900000.
Bond attorney costs: The buyer must pay the lawyers handling the mortgage finance for the bank. A bond initiation fee of around R6000 plus VAT. This is payable to the bank granting the bond. Banks often add this figure to the bond amount.
My advice is to pay extra into your bond every month to bring it down faster.
A municipal deposit: This fee is payable to the municipality when opening the account. You should open the municipal account as soon as possible , usually between one and two months after registration.
Calculating these costs on a R1.5million property with a 100% bond, Sturgess says transfer fees and others mentioned above will amount to about R88000. In addition to these costs, estate agent’s commission is also payable by sellers.
Steve van Wyk, Seeff’s managing director in Centurion, says while agent commission is often set at around 7% of the value of the property plus VAT, sellers and agents can always choose to negotiate a set fee instead.
“While it may seem like a practical and affordable idea to privately advertise your property instead of using an agent, this decision could end up costing you a lot of time and much more money than the agent’s commission would have been in the first place.”
He says agents perform various duties and have knowledge of legislative procedures an owner will not necessarily be aware of.
“Not only does the agent negotiate for the seller and connect the seller with strategic partners such as conveyancing attorneys, but they also research recent sales in the area in order to determine a realistic listing price, advise on repair work that should be undertaken prior to listing, create a marketing plan that works for the seller and screen suitable purchasers before introducing them to the property, among others,” says Van Wyk.