While most homeowners will take the agent’s commission into consideration when they are trying to determine what they will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale.
“Most sellers will consider the amount outstanding on their bond and the agent’s commission, but then do not take into account the other costs that they will need to pay during the home sales process,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“Understanding the possible costs involved in a property sales transaction will give sellers a far more accurate picture of what they can expect to get once the sale has been finalised,” says Goslett.“When determining the final amount, they can expect once their home is sold, there are a number of other costs that need to be factored into the equation.”
Here are some of the costs that sellers are responsible for:
1. Administration fees
What many sellers don’t realise is that they will have to pay an administration fee to cancel their existing bond account. Regardless of the outstanding amount on the bond account, a cancellation attorney will be used to cancel the bond.
Generally, the bond cancellation fee ranges between R3 000 and R4 000, which can be quite a shock if the seller is not expecting it.
2. Rates and taxes clearance certificate
The attorneys will require a rates and taxes clearance certificate from the local council, which will mean that the seller will be required to put money upfront to get the certificate. The council will ask for between three and six months’ payments up front in order to provide the seller with a clearance certificate.
If the home is registered within a shorter timeframe, the council will refund the additional money which the seller has paid. However, this does take some time. It is possible for the seller to only receive the money owed to them a year after the date of the sale of their home.
3. Body corporate or homeowner’s association
Much like the rates and taxes certificate, if the seller lives in a housing estate or sectional title development, it is possible that the homeowner’s association or body corporate requests that they pay their levies in advance to ensure that these costs are covered until transfer takes place.
4. Electrical Certificate of Compliance
The legislation stipulates that every homeowner is in possession of a valid Electrical Certificate of Compliance (ECOC) when selling their home. An ECOC is only valid for a period of two years. If the seller has an ECOC that is older than this, or any electrical alterations have occurred during the two year period, the seller will be required to obtain a new ECOC by enlisting the services of a certified electrician.
If no faults are found, the ECOC will cost between R500 and R1 000, depending on the size of the property and the call-out fee. If faults are found by the electrician, the cost will escalate depending on the work that needs to be done to get the home compliant.
5. Electrical Fence System Compliance Certificate
What many sellers don’t realise is that they will have to pay an administration fee to cancel their existing bond account. Regardless of the outstanding amount on the bond account, a cancellation attorney will be used to cancel the bond, says Goslett.If applicable, the homeowner will need to get an Electrical Fence System Compliance Certificate in addition to their ECOC if they have electric fencing around the perimeter of their property.
The Electrical Machinery Regulations of 2011 issued under the Occupational Health and Safety Act 85 of 1993 places an obligation on the user of an electric fence system to have an electric fence system certificate of compliance. This requirement does not apply if the system was installed before 1 October 2012. The electric fence system must be certified by an approved installer, and the certification is valid for two years.
6. Gas Certificate of Compliance
During the energy crisis, many households installed gas lines to supplement their electricity usage. These homeowners will be required to obtain a certificate of conformity which indicates that the installation has been done by a qualified technician.
On 1 October 2009, Regulation 17 (3) of the Pressure Equipment Regulations (OHS ACT of 1993) came into effect, which states that if a liquid gas appliance has been installed on the property, a Gas Certificate of Conformity is to be issued when there is a change of ownership. This certificate is valid for five years.
7. Beetle Infestation Clearance Certificate
While not compulsory, it has become standard practice for homeowners in the Western Cape and KwaZulu-Natal regions to provide the buyer with a beetle clearance certificate which is valid for three to six months. In fact, in many coastal areas, a beetle clearance certificate has become a written condition in the sales agreement.
Usually, the beetle certificate is required only in respect of two types of borer beetles that have found their way to South Africa shores through imported timber. Banks and insurance companies will often request a certificate on transfer if the home is situated in an area known to be infested.
8. Home inspection
A home inspection is not a requirement, but can be a helpful tool for sellers who want to know what defects the home has and what needs to be repaired. If a seller decides to go this route, it will cost them around R3 500 depending on the service provider they use.
Finally
“Understanding the possible costs involved in a property sales transaction will give sellers a far more accurate picture of what they can expect to get once the sale has been finalised,” says Goslett.
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