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All the costs involved in selling your house
When working out the profit from selling your house, don’t forget the seller’s costs.
When you want to sell your house, you might need to spruce it up to stand out in a competitive market. If you have a Nedbank Home Loan with HomeVision, you should have easy access to readvance funding for the renovations. If not, you might consider a personal loan for home improvements – you can cost your renovations at one of our participating building and hardware suppliers and apply for the loan in-store.
However, getting your property into the right condition to attract buyers at your asking price is not the only expense involved in selling your house. It’s best to be prepared for the various seller’s costs before you put your home on the market, so you’ll have an accurate idea of your cash flow needs during the process, and how much money you can eventually expect to make from the sale.
Costs for the seller
1. Agent commission
Once you have decided to sell your home, you’d be wise to engage an estate agent – or several estate agents – to advertise, show and sell the property. It’s true that you could do this on your own as a private seller, but then you’d need to research the process and the legal requirements of transferring home ownership thoroughly. It’s a lot easier (and safer) to hire a professional who is already familiar with all the steps in the process.
An experienced estate agent offers several more benefits. They can give you an accurate valuation of your property so that you can price it correctly. They will advertise your home on property websites, in their newsletters and on social media. They will also erect ‘for sale’ boards outside and conduct viewings with potential buyers. And because estate agents are looking at your property objectively, it’s easier for them to see which stand-out features to emphasise, as well as which potential changes they could suggest to hesitant buyers so that they can imagine the home not as it is now, but as it could be.
You are legally required to produce certain compliance certificates before the sale can go through
Agents work on commission, so even if you have more than one estate agency trying to sell your property, you will only pay commission to the agent who makes the sale. Commission can range from 5% to 7.5% of the sale price.
2. Bond cancellation costs
If you still have a home loan, you’ll need to give your bank 90 days’ notice to cancel your bond – so it’s best to give notice as soon as you decide to sell the property. If the bond is cancelled after less than 90 days’ notice, you will be liable for bond cancellation fees – equal to the interest you would have paid for the remainder of the 90-day notice period, but no more than 3 months’ interest as stated on your home loan agreement.
In some circumstances, you won’t pay bond cancellation fees – for example, when a new home loan will be registered with the same bank, if the owner of the property is deceased, or if the property is sequestrated. The process of bond cancellation ends when the home is sold, and your attorney provides your bank with the final figures. Your 90-day notice period is valid for a year. If your home doesn’t sell within a year, you’ll have to resubmit the cancellation notice so that the bank can extend the period.
3. Rates, utility accounts and levies
As a seller, you must provide a certificate confirming that municipal rates or service charges, and any electricity, water or gas accounts, are paid up. If you sell a sectional-title property, you’ll also need to make sure that you’ve paid all levies owed to the body corporate.
4. Compliance certificates
When you sell your home, you are legally required to produce certain compliance certificates before the sale can go through. Compliance certificates are required for electricity, plumbing, gas and electric fences. If the home has a solar power system installed, you would have needed an electrical compliance certificate before the municipality approved your installation and allowed you to connect it to the grid, so a buyer will need that certificate too.
A home inspection will help you identify any problems that could hold up clearance certificates
It’s not a legal requirement, but in coastal regions where borer beetles can damage wooden floors, walls and ceilings, many potential buyers include a beetle-free certificate as a standard condition in their offer to purchase. You’ll need to pay an exterminator to inspect the property and, if necessary, fumigate any infestation. You’ll also need to repair any damaged wood.
Make sure that you budget for these expenses – you could be looking at spending between R450 and R1,000 per certificate. If remedial work needs to be done before a certificate can be issued, it could cost substantially more – and the sale can’t go through until you have all the required certificates.
5. Home inspection
This is not a legal requirement, but it’s worth factoring into your costs when you decide to sell your home before you put it on the market. Firstly, paying a professional building inspector to do a home inspection will help you identify any problems that could hold up clearance certificates, so that you can get them repaired and often receive the certificate you need at the same time.
Secondly, an inspector will check that all the buildings on the property have plans with municipal approval – any discrepancies in the plans can cause massive delays in the transfer process. A building inspector’s report also allows you to show prospective buyers that the building’s structures, fittings and fixtures are in good working order. Finally, a home inspection helps you get a more accurate assessment of the property value, so you can set a realistic price.
It pays to work out all these costs, and how you are going to afford them, before you put your home on the market, so that you don’t get hit by a cash flow crunch while you’re in the middle of moving house. For example, if you plan to make an offer on a new home as soon as your property is sold, you’ll probably be applying for a new home loan, so you can avoid bond cancellation fees. If the home inspection reveals some small faults, but the cost of repairing them is more than covered by the resulting increase in the property value, you might choose a personal loan for the renovations, to be offset by the much better price you can ask.
If you currently have a home loan with Nedbank, and you’re thinking of selling your property, explore all your settlement and bond cancellation options.
