Understanding the Costs Involved When Selling Your Property

Selling a property is exciting, especially when you start thinking about the selling price and what you may walk away with after the sale. But many sellers are surprised to learn that the selling price is not the same as the amount that will land in their bank account.
There are a few costs that sellers should plan for before putting a property on the market. Knowing about these costs early helps avoid stress, delays and disappointment later in the transfer process.

1. Estate Agent’s Commission
If you sell your property through an estate agent, commission is usually payable by the seller. This is normally agreed to upfront in the mandate or Offer to Purchase.
The commission is usually paid on registration of the property, meaning it is deducted from the sale proceeds before the balance is paid to the seller.
It is important to remember that VAT may also apply to the commission, depending on how the commission is quoted.

2. Bond Cancellation Costs
If there is still a bond registered over the property, the bond must be cancelled when the property is sold.
Even if your bond is fully paid up, it may still be registered at the Deeds Office and must be formally cancelled by bond cancellation attorneys.
Sellers should also remember that banks usually require notice before cancelling a bond. If proper notice is not given, the seller may be charged an early cancellation penalty.
This is why it is wise to give the bank notice as soon as you decide to sell.

3. Compliance Certificates
Before transfer can take place, the seller is usually responsible for obtaining the required compliance certificates.
These may include:
- Electrical compliance certificate
- Electric fence certificate, if applicable
- Gas certificate, if there is a gas installation
- Beetle certificate, where required
- Plumbing or water certificate in certain areas, such as Cape Town
The cost is not only for the certificate itself. If something does not comply, the seller may need to pay for repairs before the certificate can be issued.
This can become an unexpected cost if the property has older wiring, gas installations, electric fencing or maintenance issues.

4. Rates Clearance and Municipal Accounts
Before transfer can be registered, the transferring attorney must obtain a rates clearance certificate from the municipality.
The seller must make sure the municipal account is paid up to date. In some cases, the municipality may require payment in advance for a few months before issuing the clearance figures.
Any overpayment is usually refunded later, but the seller must still have the cash available upfront.
This can come as a surprise, especially if the seller was not expecting to pay municipal amounts in advance.

5. Levies and HOA Clearance
If the property is in a sectional title complex, estate or homeowners’ association, the seller may need to obtain a levy clearance certificate.
This means that levies must be paid up to date before transfer.
If there are outstanding levies, special levies or penalties, these may need to be settled before the sale can proceed.

6. Repairs Agreed to in the Offer to Purchase
Sometimes a seller agrees to repair certain items before registration or occupation.
Examples may include fixing leaks, repairing electrical issues, replacing broken fittings or attending to defects discovered during the sale process.
If these repairs are written into the Offer to Purchase, the seller must budget for them.
For this reason, sellers should be careful not to promise repairs too quickly without understanding the possible cost.

7. Occupation-Related Costs
If the buyer only takes occupation on registration, the seller normally remains responsible for the property until then.
This may include rates, levies, insurance, garden service, security, electricity availability charges and general upkeep.
If the buyer takes early occupation, occupational rent may apply, but this must be clearly written into the agreement.

8. Capital Gains Tax
Capital Gains Tax may apply when a property is sold for more than its base cost.
For many sellers, especially when selling a primary residence, there may be exclusions or relief available. However, every seller’s tax position is different.
It is always a good idea to speak to a tax practitioner or accountant if you are unsure whether Capital Gains Tax will apply to your sale.

Final Thought
Selling a property is not only about the asking price. A well-prepared seller understands what costs may come off the final proceeds and plans accordingly.
Before putting your property on the market, ask your property practitioner and transferring attorney what costs you should budget for. This will help you price correctly, avoid surprises and move through the selling process with more confidence.