Things you need to know about selling a house in South Africa
Category Seller Advice
Selling a house in South Africa is not a difficult task but South African laws, regulations and practices can make the process a bit more costly and complex than you might think. NS Property Solutions estate agent Liezel Eitner as helped hundreds of homeowners successfully sell their property. She shares the top three things sellers need to know before they sign to be prepped and ready for the road ahead.
Selling a house in South Africa can be an eye-opener
There's no better feeling than when your property gets sold and the money you've made from your wise investment gets deposited into your account. But there's a lot that needs to happen before that day comes, and for many homeowners the process can often be a real eye-opener full of surprises they didn't expect.
While a good estate agent can help you navigate all of the complexities of selling your South African home with ease, there are a few cold, hard facts about selling your property that you just can't get away from. Unfortunately, it's not as simple as just putting your signature onto a piece of paper. You'll need money, time and a good dose of common sense if you want to sell your property without too much trouble.
Yet selling your home in South Africa is more than doable if you're willing to participate in the process and be honest with yourself and others. But if you're trying to take shortcuts or rush through the steps, you may end up losing money - and potential buyers - in the process.
Luckily, we've rounded up all the things that homeowners are typically surprised to hear when they sell their house in Mzansi. Familiarise yourself with these facts and you'll find that the process of selling your house is straightforward.
What you need to know about selling a house in South Africa
1. You have to spend money to make money, if you're selling your home
Far too many homeowners are under the impression that selling a house in South Africa costs next to nothing. While there are ways to keep costs in check, many different fees will inevitably apply.
Most sellers know that they'll have to pay attorney fees and estate agent commission, but did you know that there is a cost to cancelling your bond or to proving that your property is both compliant and cleared of any outstanding levies?
To break it down:
Bond cancellation: If you're still paying your home loan, you need to cancel it before you can sell your house. This can cost around R4 000, but the fee increases if you fail to notify your bank or home loan provider in time of your plans to sell. If you're working with a good estate agent, they'll guide you on when and how to give notice, but cancelling your bond will almost always cost you.
Certificates of compliance: South African law also requires you to submit up-to-date certificates of compliance before your property can be transferred to the buyer. Homeowners are often surprised at the money and time it takes to get these certificates in order.
If you're selling a home in the City of Cape Town, some of these certificates might apply:
- Electrical Certificate of Compliance
- Certificate of compliance of water installation
- Electric Fence System certificate of compliance
- Gas compliance certificate
- Beetle-free certificate
Most of these certificates cost between R500 to R1 000 each, excluding the expense of repairing any issues found during the inspection. If your home is older or you've made your own alterations at some point, you'll want to factor in the potential cost of updating aspects of your property found wanting during the various inspections.
Rates and taxes clearance: Did you know your rates and taxes are charged in advance when the municipality learns that you're selling your home? For homeowners who are desperate to sell, it can be extremely challenging to fork out the fee for up to four months of rates and taxes. Any other outstanding municipal fees will also have to be paid up.
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 by the conveyancer, who then pays the municipality. The bad news is that there's no way getting around this expense. The good news is that if you can't pay this fee, you can approach your estate agent and attorney for a potential payment plan.
Find out what other costs are involved in selling your property in our article: Complete guide: What it costs to sell a house in Mzansi
2. You need to have your house in order if you want to sell it
The sad thing is that not every house can be sold in the state it's in. At the very least, a home that's had alterations and improvements made to it, may need new building plans before it can be sold. At worst, a property that is tied up in legal proceedings, such as the administration of a deceased estate or divorce procedure, will be in limbo until certain legal requirements have been met.
It's important to note that it can take time to get these things in order, so selling your house could take longer than you think.
When it comes to building plans, it's better to prepare yourself now for the possibility of handing them in. Some South African banks will only provide home loans to buyers who can get hold of building plans. If that's the situation your buyer is in and you don't have the plans on hand, the sale might be delayed.
A worst-case scenario is when your building plans need updating because you made certain alterations to your property. Nothing can happen until new plans are drawn up. Tell your agent right away about any changes you made to your property so they can let you know whether you'll need new plans.
When it comes to legal proceedings, such as a deceased estate or divorce proceedings, you can't put the property up for sale right away.
In the event that a house needs to be sold during a divorce, ownership of the property must first be established. If the home is co-owned, the spouses will have to agree on an asking price as well as how the cost of selling the asset will be covered. An estate agent with experience in selling homes in divorce cases can help make the process easier.
A deceased estate has even more legal implications. Letters of Executorship must first be issued before a sale agreement can be signed. Then it's up to the executor to instruct an estate agent to advertise the property and accept an offer. Even if you have a buyer, the Master of the High Court's approval is required before the property can be transferred. It can be a massive help to work with an estate agent who has experience in selling divorced estates.
Not sure you have all the documentation you'll need to sell your property? Download our checklist in our article Documents required to sell a house in South Africa.
3. There's no getting away from contractual, legal and tax obligations
Once you sell your house, you're free from it, right? Not true. South African law protects consumers and tenants, and they both have rights that you need to know about.
If you have tenants renting the property from you, then they have the right to stay on in the property until the end of their lease agreement, even if you've sold the home. The new owner will be obliged to take over the lease and honour all the conditions set out in the contract.
Another thing to be aware of if you're a landlord is that they might have the right to first refusal, if your lease agreement stipulates it. This means that, if you want to sell your property, you first have to find out whether your tenants are interested in buying it. You don't have to accept their offer, but if you forget to give them the option to buy, it might complicate the sale to another buyer.
You'll also need to be aware of laws that protect buyers, even after the sale. One of these is defects of the property. Some defects, such as a broken window, is a patent defect - an obvious flaw. Other defects might only become visible later on, such as a leaky roof during rainy season. These are latent defects.
The buyer of your house is protected against latent defects for up to three years after the purchase of your property. If they can prove that you knew of a latent defect and didn't disclose it, you may be required to pay for the repairs, even after the sale. That's why it's so important to disclose as many issues with your home as you can think of on the Defects List provided by your agent. Don't hold anything back or it could cost you.
Sellers are often also surprised by their tax obligations when it comes to the sale of a second home. Capital Gains Tax may apply when you're selling a property that is your second home or one that was used for rental purposes. You're taxed if you made a profit from the property after October 2001, but luckily an exclusion of R40 000 applies. Here's where advice from a tax accountant proves invaluable.
If the process of selling your home sounds confusing, we'll demystify it for you in our blog post How to sell a house step-by-step
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Armed with this knowledge, you're unlikely to be surprised by any of the costs, steps or processes involved in selling your property. What makes this process even easier is having a truly competent estate agent by your side when you're selling your home.
Find out what NS Property Solutions offers sellers of properties in the Northern Suburbs of Cape Town, Worcester, Rawsonville and the Whale Coast.
For advice or guidance on taking the next step in your property journey, contact us today.
Want to learn more? Get tips on choosing an estate agent that will suit your needs in our article, How to choose the best real estate agents in Cape Town.
Author: NS Property Solutions