Most people fail to realise that selling your property is not just about getting it on the market and selling it, hopefully at a profit, and then they are stunned when they incur costs that they didn’t plan or budget for. As the seller of the property, you will be liable for certain costs, and you have to ensure that you take these into consideration before putting the property on the market.
Agent commission: Different agents charge different levels of commission, and it is recommended that you agree the commission amount in advance and get it in writing. Sometimes they charge a fixed fee, and other times they will charge a percentage of the sale price. It is recommended that you agent doesn’t charge more than 7.5% of the sales price plus VAT. It is usually possible to negotiate with the agent on commission, but often it depends on whether there is a sole mandate involved, which means that you are giving only one agency or agent the permission to show and sell your property. Usually sole mandates charge less commission, but if you don’t choose the right agent the house may take long time to sell. The advantage of opening up the sale to different estate agents is that your property will get more exposure from different sources. Agents work in competition with each other to sell the property which means that they will push hard for the sale. It is of course possible to save money by cutting out the estate agent and selling privately, but often this is more hassle than it is worth, and getting the correct documentation and legal work in place can be cumbersome and expensive. If an estate agency is selling your property they will ensure that all the paperwork and legal documents are completed. Online estate agents like Homefair charge only 2% commission when selling your property.
Bond cancellation: If the property is still mortgaged, the bond must be cancelled before the property can be transferred to the buyer. These costs are carried by the seller, and largely involve the cancellation fees for the conveyancer, and any applicable bank penalties. Not many people know that if they sell a mortgaged property within the first two years they will be liable for penalty interest, which usually adds up to three months’ worth of interest on the bond, and they are often unprepared for this cost.
Rates & Taxes: All outstanding rates and taxes on the property have to be paid in full before the sale can take place. Sectional title properties often have levies due, and these must also be paid in full before the property can be transferred to the buyer.
Compliance certificates: Property law now requires an electrical clearance certificate before transfer and the seller is responsible for arranging and paying for an electrical inspector to carry out the compliance inspection. Any electrical work that has to be done before compliance can be achieved has to be paid for by the seller as well. In some cases there are other compliance issues such as fumigation for termites or borer worm. Buyers must check first to ensure that they know which of these will apply to their properties.
Once you are aware of all the costs involved you can budget for them and there will be no nasty surprises!