CALCULATING THE COSTS INVOLVED IN SELLING A PROPERTY
ARTICLE: IOL PROPERTY
There are legal and administration costs involved when selling a property.
- Bond cancellation: This is a legal cost that is carried out by the bond attorney appointed by the bank. Provide the bank with a written notice of your intension to sell. Consider the amount outstanding on your bond to calculate how much you will make on the selling of the property. Homeowners and life insurance premiums to ensure the insurance remains in place until the selling process is complete.
- Agent’s commission: Multiply the sale price by the commission rate plus 15% VAT.
Example: On a property of R1 mil at 6% commission rate
R1 mil x 6% is R60,000
Multiply the commission by 15%
R60,000 x 15% is R9000
Total cost will be R 69,000
- Rates, taxes, levies: A rates and taxes clearance certificate from the municipality is necessary. A payment for between 2 to 6 months in advance could be required. If registration is completed sooner it will be refunded. In a sectional title estate, payments for up to 3 months of levies might be required before registration. To calculate, multiply the latest municipal bill and levy invoice by 3 for a rough budget to cover this account.
- Compliance certificates: Registered professionals must perform an electrical, plumbing, gas, water and electric fence inspection. Also an inspection to ensure the property is free of wood borer beetles. Extra costs will depend on repairs necessary which can escalate with more serious issues. Set aside roughly R5000. Cost for certificates can range from about R400 to R1000 per certificate.
- Repairs and maintenance: Patent defects to fix: Broken windows, cracks in walls, rotten wood. Latent defects to fix: Leaks, faulty geysers, rusty pipes.
- Moving costs and temporary accommodation: Costs for a moving company and the possibility of paying for temporary accommodation in the period between moving out and moving into the new property.
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RENTING VS BUYING IN TODAY’S MARKET
ARTICLE: IOL PROPERTY
INTRO REAL ESTATE
The decision to rent or buy a home demands careful consideration. Understanding the current market trend is crucial because it impacts whether the flexibility and lower initial costs of renting or equity-building potential and stability of buying, better suits your needs and financial goals, according to Antonie Goosen, founder of Meridian Realty.
Renting Advantages
FLEXIBILITY: Relocating is easier, there is no need to sell when you move.
LOWER INITIAL COSTS: You have less upfront financial commitment, only a deposit and the
first month’s rent to pay.
MAINTENANCE FREE: Tenants are not responsible for maintenance and repairs.
ADAPTIBILITY TO MARKETS: More flexibility and adaptability to changing markets
and interest rates.
Renting Disadvantages
EQUITY: There is no equity building in the property. The rent payments benefit the landlord.
INCREASE: Tenants are subject to annual rent increases and it can outpace inflation.
INVESTMENTS: There is no return on an investment.
RESTRICTIONS: There are restrictions on modifying the living space.
Buying Advantages
EQUITY: Because equity is built over time, it is a financial asset.
STABILITY: Long –term stability.
PERSONOLIZE: You are able to modify and personalize your living space.
INVESTMENTS: There is an increase in value and a return on your investment when you sell.
FINANCIAL SECURITY: Long term security.
Buying Disadvantages
UPFRONT COSTS: Costs like down payments, transfer and bond costs, insurance, rates, taxes
and levies.
MAINTENANCE AND REPAIR COSTS
MARKET VOLATILITY: This can pose risks and economic downturns that can deflate property
values. This could mean financial losses if selling your home during a downturn.
COMMITMENT: The commitment is long-term in terms of finances and your home.
Renting or buying? According to Taryn Davies Stevens of Intro Real Estate, the final decision
depends on your financial and personal circumstances and preferences and readiness for
commitment.
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“Take note that the content above is merely set out as the opinion of the author and his interpretation of the relevant legislation. It will not be regarded as a legal opinion and nor does the writer intend it to be. It is imperative that any reader obtain his own legal opinion relating to any of the content above and will the writer hereof or his employer not be held responsible for any of the content of this article.”
