Costs related to the selling and purchasing of a property
Real Estate Matters – By Allan & Laura-Jean
You’ve put your property on the market, or you’ve submitted an offer to purchase on a property – are you aware of the costs and charges that you may incur before the deal is done?
An experienced estate agent will be able to enlighten you as to the additional costs which accompany a property transaction. Below we have highlighted the most common costs which sellers & buyers often don’t take into consideration.
Cost to Seller
If your entire property is not to municipal approved plan, you could very likely find yourself in a costly situation in order to conclude your sales agreement. It is always a good idea to have your plans approved for any alterations you may have done, before you go to market. In this way, you have control as to whether to demolish that illegal structure or get it on plan, before you accept an offer and then find yourself in the unenviable position of having to comply with the legislation retrospectively to facilitate the deal.
Depending on the nature of your property, you will have to provide, at your cost, some or all of the following. Compliance certificates for electrical installation, electric fence, plumbing, gas & beetle infestation. If your property is found not to be to specification, then there will an additional charge by a contractor to remedy the problem.
Should there be outstanding municipal costs incurred by you or possibly your tenant, you will have to bring this account up to date before a municipal clearance certificate will be provided.
If the property you are selling is part of a sectional title development, remember that any special levies raised prior to the sale are for your account in its entirety.
As a seller, if you have an outstanding bond on your property, advise your bank timeously of your intention to sell your property in order to avoid excessive bond cancellation penalties.
Cost to Buyer:
When submitting your offer to purchase, remember that in addition to your purchase price, you will need funds to cover bond registration costs, if applicable, as well as transfer duty on the value exceeding R1,000 000, and transfer fees which include attorney costs and posts and petties.
Should the property you are purchasing form part of a VAT enterprise, you will be required to pay VAT on the full purchase price, but will not be liable for transfer duty. In the event that both parties are VAT registered, the transaction will most probably be zero rated.
If you intend taking early occupation, the amount as specified in the contract for occupational rent will also come into play on a pro-rata basis.
It is important for both seller and buyer to be fully appraised of all costs relating to the intended transaction, so that adequate financial provision can be made. All too often transactions are delayed or we hear complaints from both parties that they were not fully informed before entering into an agreement of sale. Knowing what you are in for, ahead of time, will prevent surprises at a later stage and allow you to budget accordingly.