The cost of selling a house in South Africa
Category Seller Advice
Complete guide: What it costs to sell a house in Mzansi
The cost of selling a house in South Africa might not be as high as you think, especially once you understand the purpose of each expense. That said, selling your property is not entirely without expense, and it's best to plan ahead if you're thinking of finding a new owner for your home.
Calculating the true cost of selling your property
Most people expect that purchasing a property incurs the longest list of expenses. While the cost of selling your home might be lower, several expenses might still apply. It all depends on your property, how you bought it and how you're selling it.
Some costs are standard, while others only apply in certain circumstances. There's even one expense that you can avoid if you plan ahead, so read on.
Whatever your situation, it's a very wise decision to get an understanding of the costs involved in selling your property before you get started. That way, there will be no surprises along the way and you'll have a better idea of the money you'll get from the sale.
New to the process of selling property? Here's what you need to know: How to sell a house step-by-step
In a nutshell: Costs related to selling your property
These costs may apply when you sell your home, depending on your situation:
- FICA verification
- Disbursements
- Rates and taxes clearance
- Bond cancellation
- Estate agent commission
- Electrical certificate of compliance
- Certificate of compliance of water installation
- Electric fence system certificate of compliance
- Gas certificate of conformity
- Beetle-free certificate
- Building plan updates
- Lost title deed replacement
- Capital Gains Tax
Only some of these expenses are standard, with many fees only applying if your property has specific features.
Standard costs involved in selling your South African home
Luckily the list of expenses that are standard with the sale of every home is a short one. They are also managed by your conveyancing attorney, who will take care of all the administrative work for you.
1.FICA verification fee
There's no getting away from working with a transfer attorney or conveyancer to have the Deeds Office transfer your property to the new owner. These special attorneys are required by law to verify both parties in the sale of your home, a process for which they charge a fee. They are compelled to do so by the Financial Intelligence Centre Act (FICA).
2.Disbursements charges
To transfer your deed to the new owner, the conveyancer will also have to pay several fees to the Deeds Office and council or municipality. To cover their expenses, they will charge a disbursement fee to you.
Law firms typically have a set disbursement fee, and there's unfortunately no way to avoid this fee either.
3.Rates and taxes clearance expenses
A final expense that all homeowners are charged when they sell their homes is related to rates and taxes. When your conveyancer notifies the municipality that your property will be sold, the municipality calculates an advance collection of rates and services.
This amount is charged to you, but there's no need for you to pay the municipality directly. The conveyancer will do so on your behalf after charging the amount to you.
The good news is that the cost of the certificate that clears you of any further rates and taxes is charged to the buyer of your home.
Expenses that depend on your property and situation
If you still have a home loan for your property
...then you pay a fee to the bank or home loan provider for the cancellation of your bond.
The size of this fee depends on things like:
- how long you've had the bond
- how many home loans you have
- who provided the loan
- and whether you've given 90 days written notice
How to avoid unnecessary charges: Giving 90 days written notice is essential to avoid unnecessary penalties. And don't worry: if your property doesn't sell within 90 days, your bond isn't automatically cancelled. Your financial service provider will only cancel your home loan once your house is sold and all the relevant documents are received.
If you're selling through a property practitioner
...then you'll pay a commission for their services.
Both estate agents and auctioneers can help you sell your property.
In the case of estate agents, you'll be charged either a percentage of the final selling price of your home or a flat fee. Either way, you will often be able to negotiate with the estate agent on the percentage commission you are charged. If the estate agency you're working with charges a flat fee, the exact fee will be stipulated in the sales mandate that you sign with them before any work starts.
If you're selling through an auctioneer, no commission is charged to you. Keep in mind that some fees will still apply depending on the auction house you choose to work with. There is also a chance that you will only get offered the minimum price that you were hoping for, so think carefully before going this route.
Read about the three different ways to sell your property here.
If you bought your home more than two years ago
...then you'll need an Electrical Certificate of Compliance.
This certificate is required before a property can be transferred. It is also only valid for two years, which means that if you bought your home more than two years ago, the previous certificate will be too old.
It's also worth keeping in mind that if you completed any electrical work on your property, you'll require an Electrical Certificate of Compliance supplement. If your work does not comply with safety standards, you'll have to improve the work or pay a contractor to do so before a certificate can be issued.
Obtain a new Electrical Certificate of Compliance from an electrical contractor that is registered with the Department of Labour.
If your property is within the City of Cape Town municipality
... then you will need a certificate of compliance of water installation no older than six months. This certificate can only be issued by a plumber who is registered with the City of Cape Town.
It certifies that:
- all geysers in your home are properly installed
- your water meter works
- storm and grey water is properly disposed of
- there are no terminal water fitting leaks
The plumber will not check for minor leaks, blocked drains or water pressure issues so it's vital that you let your estate agent know of any such problems before you sell. They'll note these issues in a report of latent and patent defects to your property.
If you have an electric fence or gas appliances installed or altered
... then you'll need an Electric Fence System certificate of compliance and a Gas compliance certificate.
For electric fencing, a new certificate is only necessary if you changed, altered or modified your fence. This excludes minor repairs such as broken wires or bobbin replacement. These certificates are issued by Electric Fence System Installers, who will need to know whether your fence was installed before or after 1 October 2012.
For gas appliances, a certificate needs to be issued regardless of whether you've altered your built-in gas braai, gas stove or gas hot water system. Get your Gas Certificate of Conformity from anyone who is registered with the Liquefied Petroleum Gas Safety Association of Southern Africa to issue one.
If you're in a coastal region
...you may need a beetle certificate to determine whether your property has an infestation of wood borer beetles, which is commonly found in coastal areas. Your estate agent or home loan provider will let you know whether obtaining this certificate is necessary. It's more likely that you'll need one if you're selling a freestanding property.
Wondering which estate agent to choose to help you navigate the ins and outs of the sales process? Read our article How to choose the best real estate agents in Cape Town for a step-by-step guide.
If you made any alterations or improvements to your property
...then you may need to update the building plans with the help of a professional.
The following improvements require that a new building plan be submitted and approved by your municipality:
- Repairs such as removing or adding a wall, or changing the roof material
- Installing minor works, such as a swimming pool or a small wendy house
- Putting up a temporary structure
- Demolition of any building structures
These changes have to be reflected on your building plans before your property can legally be sold to a new owner.
Find advice from the City of Cape Town in its Development Management Information Guidelines Series booklet.
If your alterations impacted the electrical wiring of your home, you'll also need an Electrical Certificate of Compliance.
If you lost your title deed
...then you'll need to cover the cost for the duplicate of the original. Unfortunately, your property can't be sold without this all-important document so it's best to start the process of obtaining a duplicate right away.
The transfer of your property can be delayed if you no longer have your deed so let your estate agent or conveyancer know right away so they can advise you on the next steps.
Wondering what other documents you'll need to sell your home? Find out everything you need to know in our article Documents required to sell a house in South Africa
If you're selling your second property
...then you may need to pay Capital Gains Tax. The laws regarding this form of tax can seem somewhat complicated so it might be best to work with a tax accountant.
It applies when you're selling a property that is your second home or one that was used for rental purposes. You'll also only be taxed if your property asset led to you making a profit anytime after the tax law was introduced in October 2001. An annual capital gain exclusion of R40 000 also applies, which may lower the tax you have to pay after selling your property.
Whether you've made a profit or loss, the amount must be declared on your annual income tax assessment, which a tax accountant should easily be able to help you process.
While a wide range of expenses may apply when you're selling your house, it's unlikely that they'll all be relevant to your situation.
If any of these fees or charges seem unclear to you, rest assured that an estate agent can help you make sense of them. Property practitioners specialise in understanding the different aspects of your sale and know how to make transactions - and the costs involved - seem less overwhelming.
Armed with the knowledge of what it costs to sell a property, and the help of a skilled realtor, you can sell your home the stress-free way.
Wondering what your property is worth? Find out more in our article Important factors that affect the value of your property
If you're ready for a valuation of your home in the Northern Suburbs of Cape Town, contact us for a free comparative market analysis here.
Author: NS Property Solutions