Calculating the costs of selling your home
Selling a property can be surprisingly expensive. Some costs can be deducted from the final sale price, while others must be paid upfront.
Before listing your property for sale, it is recommended that you first do the calculations for all the associates costs so that you can budget accordingly.
“Sellers are often surprised by the various costs involved in selling a property. To avoid being left with less than anticipated, sellers should discuss these expenses with their real estate professional and calculate the total costs before marketing their home,” advises Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
- Agent’s Commission
Many sellers forget that 15% VAT is charged on top of the agent’s commission. To calculate what your agent’s commission will be, multiply the sale price by the commission rate, then multiply the commission amount by 15%, and then add this amount to the commission to find out the total amount payable.
For example, an agent’s commission on a R1m property at a 6% commission rate plus 15% VAT would amount to R69,000 in total (R60,000 commission plus R9000 VAT).
- Municipal & Levy Accounts
Sellers need a rates and taxes clearance certificate from the local municipality for the transfer to proceed. This fee ensures that rates and taxes are paid during the registration process, often requiring payment for two to six months in advance. If registration is completed sooner, the municipality will refund the excess amount. Similarly, in a sectional title estate, sellers might be charged approximately three months’ worth of levies upfront before the sale’s registration,
To calculate this, multiply your latest municipal bill and levy invoice by three to have a rough budget set aside to cover this.
- Outstanding Bond Costs
Sellers will need to consider the amount outstanding on their bond in order to calculate how much they will make on the sale of their home. Apart from this, each financial institution also has its own rules and charges for cancelling an existing bond. Sellers should check with their institution to determine the expected fees. Most require a 60- or 90-day notice period; otherwise, penalty fees apply.
- Compliance Certificates
Various compliance certificates (electrical, plumbing, gas, beetle, electric fence) are required before the transfer can proceed. Sellers must also cover the costs of any necessary repairs identified during the home inspection to obtain these certificates. The cost for these varies greatly depending on how great the repair works are. Sellers should have a minimum of roughly around R5000 to cover these costs, but if serious issues are found, this amount can escalate dramatically.
“Understanding the possible costs involved in a property sales transaction and doing the necessary calculations ahead of time will give sellers a far more accurate picture of what they can expect to get once the sale has been finalised,” Goslett concludes.
Writer: Kayla Ferguson
