Your home, whether a house, a townhouse or a flat, is probably one of your biggest investments. It is important to understand the procedures and pitfalls when you convert this investment to cash.
This brochure is intended to help you achieve the best possible results when you sell your home.
The decision to sell your home involves three important steps:
- The appointment of an estate agent to help you sell your home.
- The signing of the agreement of sale.
- The appointment of a conveyancer to register the transfer of your home to the purchaser and to collect your purchase price.
APPOINTING AN ESTATE AGENT
You can approach one or more estate agents of your choice to market and sell your property.
In particular, you must decide:
- How many agents you will appoint.
- On the scope and period of any sole mandate.
It is important to appoint a reliable agent who should preferably be a member of the Institute of Realtors. It is important to understand and preferably to record the scope of your instructions to the estate agent.
The agent should give you the names of all persons introduced to the property (to avoid commission disputes).
The agent will help you set a market-related price, supported by a comparative market anaylysis.
The agent will give you advice on:
- Preparing your home for show so that it is attractive to prospective buyers.
- Determining what strategy should be implemented to market your property for sale.
- Negotiating the terms of the sale.
The agent will also see whether the buyer qualifies in terms of financial needs to buy the home and will assist with bond arrangements. After the sale agreement has been signed, the agent will pass on the instruction to register the transfer to a conveyancer selected by you.
SIGNING AN OFFER OR AGREEMENT OF SALE
Every sale of immovable property must be in writing. Therefore the seller and the buyer must both sign the document and initial all changes. Either party may, in writing, appoint someone to do so on their behalf. An offer to purchase becomes a binding agreement on acceptance.
The contents of the sale document which will most concern a seller will be the following:
- The purchase price.
- How and when the buyer will pay the purchase price.
- The date of occupation.
- The occupational interest the buyer must pay until the price is paid.
- Details of any cash deposit.
- The amount of agent's commission and when it is payable.
- The details of known but not obvious defects or work which the seller must attend to.
- Whether the property is sold 'as is' (voetstoots).
- Whether the seller must provide an electrical certificate of compliance and a certificate that the property is free of borer beetle infestation.
- Movable items included in the sale.
- Fixtures which the seller will remove.
- Any special conditions which the buyer may want to impose, especially if they cause a delay or may result in the sale falling away.
- Whether any suretyship is offered on behalf of the buyer.
The standard documents of most estate agents will cover these items. There may be variations and it is desirable that if any doubts exists, the agreement of sale is checked by your conveyancer before signature.
The use of telefaxes should ensure that no delay occurs.
The standard documents also provide that:
- The conveyancer appointed by the seller will attend to the registration of the transfer of the property to the buyer.
- The buyer pays transfer costs including transfer duty.
- The buyer pays rates from the date of occupation.
- The buyer and the property are properly identified.
SOME PROBLEM AREAS
Experience has shown that with care, mistakes and problems can usually be avoided. For example:
- Agreements of sale should be signed on the documents of the agent you appointed to sell your property.
- Ensure that you understand fully the implications of the sole mandates.
- Try to avoid giving occupation to the buyer until the buyer's finances are in order.
- Disclose known defects.
- Read and understand the sale agreement before signing it.
- Do not be rushed into making your decision.
- Do not buy another property until the finances from your sale are in order and then ensure that the two transactions are properly linked.
- Do not inflate the purchase price with a kickback to the buyer to enable the buyer to obtain a higher bond.
- Ensure that the agreement of sale is clear about which fixtures, equipment or fittings will remain and which will be removed.
- If there are any encroachments, such as buildings straddling the boundary or fences incorrectly positioned, they must be mentioned in the agreement of sale.
- Ensure that you don't have to pay commission if the buyer defaults.
- Remember to take VAT into consideration if you are a Vendor.
- Remember that verbal promises may not be binding.
- Ensure that if anyone buys as a nominee, you are protected.
If you have any doubts, obtain advice.
Sales of flats and townhouses are dealt with along similar lines as those set out above. Points to remember with Sectional Title sales are:
- Exclusive use areas such as parking bays and garden areas should be mentioned in the Agreement of Sale.
- Any right in favour of a Developer to extend the scheme must be mentioned in the Agreement of Sale, otherwise the sale may be invalid.
- Special levies (in addiction to the monthly levies) imposed by the Body Corporate are payable by the owner of the Unit at the time when the special levy was imposed. This may need to be negotiated with the buyer.
- Have copies of the Rules and the Financial Statements of the Body Corporate available and invite the buyer to study them.
A conveyancer is an attorney who has an additional qualification in the Law of Property and the procedures and practice of property registrations. The South African deed registration system is one of the best in the world. Disputes in respect of ownership are rate and that is why insurance against loss of ownership is unknown in South Africa.
To protect the rights of the public and to ensure the existence of our excellent system of registration, the law provides that only qualified conveyancers having the necessary knowledge, skill and attention to detail may attend to the transfer of property and related transactions.
The conveyancer must have detailed knowledge not only of Property Law but also of Company Law, Insolvency, the Law of Succession and Matrimonial Law to mention some areas of law.
The conveyancer is therefore an essential part of the procedure whereby your home is transferred to the buyer.
- Checks the Agreement of Sale and gives advice when asked to do so.
- Explains the Conveyancing procedure to the seller and the buyer.
- Arranges for the repayment and cancellation of any mortgage bond over the property, using the buyer's finance.
- Prepares the formal documents to enable the property to be transferred to the buyer.
- Arranges for the proper signature of these documents.
- Obtains the rates clearance certificate from the Municipality or the Levy Certificate from the Body Corporate and the Transfer Duty Receipt from the Receiver of Revenue.
- Ensures that the buyer pays the costs and Transfer Duty.
- Obtains the guarantees that the purchase price will be paid.
- Collects the deposit and occupational interest.
- Registers the transfer of the property to the buyer.
- Arranges for payment of the agent's commission on registration of transfer, on behalf of the seller.
The seller should ensure that the conveyancere personally attends to the seller when calling at his or her office. The conveyancer should explain the procedure to you and keep you informed of the progress. If any delays occur, you are entitled to be told about them and what can be done to avoid them. If in doubt, ask your conveyancer to explain this.
You should take great care when you sell your home to ensure that you, your estate agent and your conveyancer work towards the common goals of selling your home at the best price and of paying the price to you as soon as possible.
Both your estate agent and your conveyancer are there to help and advise you.
For more information, contact our offices on +27 41 396 9200