Selling your home involves various costs, some of which must be covered before the sale. Budgeting for these expenses is essential.
As counterintuitive as it might be, there are various costs involved in selling your home. While some of these costs can be offset against the final sale price, others will need to be settled before the sale can go ahead and should therefore be budgeted for before placing your house on the market.
Below are the five main costs involved when you sell your home:
1. Bond Cancellation Fees
Each financial institution will have its own rules and applicable charges for cancelling an existing bond, so you should enquire with your financial institution to discover what you can expect to pay here. Most financial institutions require either a 60- or 90-day notice period, otherwise penalty fees will be charged. To avoid these costs, as soon as you put your property on the market, you should send a written letter to your bank to alert them of your intention to sell. The notice period can always be extended if you have not yet sold within the stipulated notice period.
2. Municipal Accounts
For the transfer to go ahead, you will need to acquire a rates and tax clearance certificate from your local municipality. This fee is charged to make sure that rates and taxes on the property will still be paid while the registration process is underway. The municipality usually asks for between two to six months upfront. They will later refund this amount to you if the registration process is completed within a shorter timeframe than what was billed for.
3. Special Levies
Similarly, if you live in a sectional title estate, you could be charged roughly three months' worth of levies upfront while the registration of the sale takes place. You can speak to your HOA or Body Corporate to find out the specifics around these costs.
4. Compliance Certificates
You will need to pay for the various compliance certificates (electric, plumbing, gas, beetle, electric fence) required during the home inspection process before the transfer can go ahead. You might also need to cover the costs of addressing any issues that are pointed out during the inspection.
5. Tenant Deposit
If you are renting the property to a tenant, keep in mind that you will need to repay their deposit with interest. You should also make room in your budget to pay for any possible repairs in case there are any damages to the property after they vacate that could not be deducted from their deposit.
