Important costs for sellers to keep in mind & what agents do to earn their commission
Category Expert Insight
While agent's commission is often one of the first cost considerations that sellers think of when it comes to selling their home, there are other costs that sellers and buyers need to keep in mind as well.
Trevor Sturgess, MD of Seeff Kibler Park, always encourages his clients to look carefully at the other costs involved with selling. He says besides agent's commission (usually set between 6% and 8% plus VAT of the selling price) sellers will also need to pay the following:
- 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 that the property is for sale as soon as the property is listed. Your agent will be able to advise how.
- 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 that the seller is required to provide is an Electric Fence Certificate that 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 that the plumbing is in order and that there are no insect infestations in the home. Cost is to be quoted for.
- Municipality final figures 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 trucks, breakages, the administration of informing people of your change of address and taking days off work to coordinate the move should also be considered. Moving can add to your stress levels significantly.
- 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.
The followings costs are to be covered by buyers:
- Transfer costs to the transferring attorney.
- Transfer Duty this is a tax to the government on properties over R900 000.
- 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 that 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 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.
Buying a property of R1.5 million with a 100% bond will attract transfer fees as mentioned above of around R88 000".
How agent's commission is determined and what agents do to earn their commission
Steve van Wyk, Seeff's MD in Centurion, says while agent's 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 what the agent's commission would've been in the first place.
Agents perform various duties and have knowledge of legislative procedures that an owner will not necessarily even be aware of.
Not only do they negotiate for the seller and connect the seller with strategic partners like 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 amongst others.
Author: Tanya Van Buuren Botma