Buying or Selling Your Property? Know The Hidden Costs
Category Market Insight
Any property related decision is filled with excitement and concern. The process may seem relatively straightforward, have the capital, complete the paperwork, and the deal is done. However, like any purchase, there is fine print. Whether buying or selling, it is important to be aware of all the additional expenses involved, safeguarding yourself and your finances.
Understand the finances
Numerous costs are involved in the buying and selling of property. For example, it is easy to think that by purchasing a property that needs some work, you are saving money, this may not be the case, as the money you are 'saving' will ultimately be spent on renovating the space. The same can be said for the sale of a property, the money 'saved' could be spent on other unexpected expenses.
It is important to do your research and understand the financial aspects of a property purchase or sale. FMS Sales & Leasing can talk you through the process and advise on the best path to follow.
What to know when buying -
Transfer fees or costs include;
- Conveyancer's fee: this covers the cost of registering the buyer's ownership of the property with the deeds office. It includes general disbursements (such as postage and petties) and is subject to 15% VAT.
- Deeds Office fee: covers an administrative fee for receiving and processing your conveyancer's paperwork, as well as for registering the change in ownership of your property.
- Transfer duty fee: a tax levied by SARS on property purchases. This is typically one of the largest additional costs for buyers.
- Attorney fees: The attorney in charge of registering your bond will charge a professional fee as well as general disbursements, plus VAT, this is calculated based on the size of the bond.
- Bond initiation fee: an administrative fee for initiating your bond and opening your bond account.
- Deeds office: a fee will be charged for the registration of the bond over the title deed.
What to know when selling -
As with buying, selling a property come with additional hidden costs - Below we have highlighted a few to be aware of;
- Bond cancellation costs: includes the attorney's fee as well as the fee paid to the Deeds Office to cancel the bond. Be prepared to pay a bond cancellation fee if the property still has a bond attached to it.
- Compliance certification: these protect the seller in the long term and need to be in order before the property transfer can take place, they include electrical, plumbing, gas, beetle and electric fencing certificates.
- Rates and taxes: these include future-dated payments during the property transfer process and is usually an estimate based on previous accounts. This is a requirement to obtain a clearance certificate from the local municipality for the sale of the property.
- Agent commission: a percentage of the purchase price earned by an agent on the sale of a property, this is payable by the seller to the agent.
Other general costs should also be considered, such as moving costs, monthly property insurance, and rates and levies to the City of Cape Town. Take the time to do some market research on the property market before making a decision to buy or sell.
Overall, when deciding to buy or sell a property, it is important to consider all the associated costs, hidden or otherwise. Working with a reputable real estate agent and attorney can help you navigate these costs and ensure you are fully informed about the financial implications of selling a property in Cape Town.
Author: FMS Sales and Leasing
