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These are the costs of selling a home in South Africa

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Let nobody fool you, the costs associated with selling your home have crept up in recent years to the point where consumers have become increasingly wary about how much they will have in their hands at the conclusion of the process.

The most substantial of these costs (in the short term, at least) is the estate agent’s commission that accompanies the appointment of an agent to act on your behalf in marketing and selling your home.

I say short term because if a seller skimps on paying a professional to undertake a thorough examination of the property and undertakes quality repairs to rectify defects and/or the necessary compliance work, settling potential disputes with the property buyer could be significant in the months following the sale.

Every owner wishing to sell their property is aware these days that there is an expanded range of options available, apart from the traditional estate agency model. Of course, most traditional estate agencies are prepared to negotiate their commission that usually starts at 7% (plus VAT) of the selling price.


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So-called “disrupter” models range from selling your home yourself using a web-based service such as Private Property, to the use of a limited service estate agency option that offers a low fixed commission (such as Leadhome with a fixed commission of R39,995) that is stated upfront, or selling your property on auction with the buyer paying the auctioneer’s fee of up to 10% of the accepted selling price. The latter option is fairly unusual in South Africa but popular in countries such as Australia and New Zealand.

Here’s a short list of the costs a home seller can expect to encounter3-point checklist.resize

  • Estate agent’s commission
  • Bond cancellation fee – for your existing bond. Most banks require 90 days’ notice to cancel your bond to avoid you paying penalties so if you are thinking of selling make sure you give notice in advance
  • City and town councils require payment of any outstanding rates and taxes as well as an upfront payment of rates and taxes of 4 months before they will issue a rates clearance certificate necessary for the deeds office to effect transfer
  • Levies if the seller is in an estate or a sectional title property scheme
  • Compliance certificates – electrical, electric fence (where applicable), plumbing, gas, beetle infestation
  • Capital gains tax if a profit was made on the sale of a secondary property
  • Home inspection – if required
  • House dressing – if required.

Estate agents commission or alternatives

Being a large number, estate agents’ commission is generally looked at carefully by homeowners wishing to realise as much value as possible out of the sale of their property.

Dr Andrew Golding, chief executive of the Pam Golding Property group, takes the view that the specialised skills set offered by highly trained estate agents ensures that clients enjoy discernable added value in the transaction process.


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“Fundamentally, the risks associated with selling what is more than likely someone’s most valuable asset are significant – in all market cycles regardless – particularly given that it is likely that the average client will not transact more than three or four times in their lifetime and will therefore not be that well-versed in the nuances of the transaction,” he says. “The role of the astute estate agent is to mitigate this risk and ensure absolute comfort.”

Golding concedes that property portals widely used by property sales professionals bring large volumes of potential buyers but he questions the quality of such unqualified buyers.

“Any top-producing professional estate agent will tell you that they would far rather have fewer, yet more qualified buyers, than more unqualified buyers,” says Golding. “It is, therefore, integral to an agent’s service that their personal network has the ability to access the ‘right’ buyers for a property and that these buyers are then strategically managed to ensure the most lucrative offer is brought to the benefit of the seller. In fact, this is the fundamental benefit of awarding an agent an exclusive mandate.”

He says among the key skills of estate agents working for so-called traditional agencies is their ability to close a deal, eliciting the best price and then creating a watertight document set to avoid any later disputes.

“This is central to the real value that the individual agent adds to the process,” he says. “Remember, in the South African context, the estate agent is in fact managing the tension between what are ostensibly two diametrically opposing desires (ie the seller, who wants the highest price and the buyer, who wants the lowest). This ‘dance’ requires extremely adept human skills and an understanding of sales psychology.”

Golding concedes that there is room in the industry for discounted service offerings but clients need to be aware that “the mitigation of the risk inherent to selling any residential property plummets with the price charged for the service”.

Anton Bartman of isellproperty says that traditional agencies have become more negotiable about their commissions since disrupter agencies started gaining traction.

“In most ‘disrupter’ models the lower commission amounts can be achieved by ‘contracting’ the seller to do some of the actions that a traditional agent would normally do, such as buyer vetting, taking photographs, erecting For Sale signs and showing prospective clients around the property,” he says, making the point that salespeople from disrupter agencies may not be the most professional, security may be an issue when a prospective seller allows poorly vetted prospects to enter the property, and that there may be a confidence issue in that some sellers feel more comfortable having their property sold by a “professional” estate agent.


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“I am of the view that traditional agencies certainly have a lot of value to offer and will keep on dominating the industry,” he says. “I do not really see that the ‘disrupters’ will take that much market share.”

Bond cancellation

The seller is responsible for a bond cancellation fee, even if the bond is close to or at zero. Bond holders generally require three months’ notice. The usual calculation is to multiply the outstanding balance of the bond by the interest on the bond multiplied by 90 days. The seller should inform their bank of their intention to sell before the property is put on the market. Note that most banks will not charge a cancellation fee if the seller takes out a bond on his or her new property with the same bank.


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Upfront rates payments to city or town councils

Most, if not all, city and town councils demand upfront payment of up to four months on rates in order for the seller to get a clearance certificate. The bad news is that it can be difficult to recoup any amount that is due. A small industry has sprung up in cities such as Johannesburg with service providers negotiating with city officials for refunds on behalf of sellers.

Upfront, advance payment of leviesbe-clever

Homeowners associations in freehold complexes and boards of trustees in sectional title developments may require such payments before providing a levy clearance certificate.

Certificates of compliance

Such certificates are required for electrical, electric fences (where relevant), gas reticulation, plumbing systems and, in some provinces, infestation certification. These fees can usually be negotiated down.


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Building inspection

Having a professional undertaking a detailed inspection of the property and providing a written report can provide a buyer with the assurance that a home is in good shape. Of course, there is also the possibility that the seller may be faced with a buyer who makes unreasonable demands about repairs that may not be strictly necessary. Negotiation may be key.

Capital gains taxchasmaurflats3

If you make a profit of less than R2m on the sale of your primary property then you are not liable for capital gains tax.

Sellers should also consider the possibility that buyers may want to purchase soft furnishings such as curtains or blinds made specifically for a certain home. In such cases, sellers will have to include the cost of replacement products when they move to their new home.

Some property experts hold the view that staging assists in achieving the target price rather than putting an empty home on the market. At the very least a seller can consider staging in certain high use rooms and at least one bedroom since it is common cause that some prospective home purchasers have difficulty in visualising the look and feel of a home when the rooms are empty.


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Words: Blake Wilkins

Trusted Tenant - #TenantPower

hometimes@pixelbaste.com

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