Selling a home Selling a home can prove to be extremely challenging if you don't have a clear idea how to go about it.
First National Bank Home Loans have put together a few simple steps that should help you increase your-know how and limit the stress factor.
Step 1: What to put on the price tag?
The first thing you need to establish is the market value of your property. There are various ways to do your research:
• Enlist the assistance of a prominent estate agent in the area
• Read your local newspaper's property sections to gauge what prices houses are selling for in your area
• Visit property websites to obtain an estimate value of homes in your neighbourhood
• There are also several private companies that provide this service at a fee Whichever you choose, establish what you would consider to be the minimum realistic selling price. There's obviously possible profit to be made in property, so it is vital to understand the costs and obligations. The major ones include
• Outstanding balance of your existing home loan, if applicable
• Commission paid to either an estate agent or any other intermediary selling your property
• The South African Revenue Service regarding Capital Gains Tax if this is not your primary residence
• Municipal and legal costs
Step 2: Who will sell your property?
You can task a registered estate agent to do the job or even sell your house privately. Flying your own flag A private sale will mean a lot more work on your part. Apart from ensuring that the property is well presented when being viewed by a potential buyer, there's also the matter of legalities and agreements. You can buy a run of the mill sale agreement from a leading news outlet, so long as you have a clear understanding of the specific information required and where it should be sent.
Outsourcing to a professional : The most common way to sell property is through an estate agent. When selecting an estate agent, choose a professional with a reasonable knowledge of your area. Note the "For Sale" signs and consult your local property guides for a good indication of the estate agents that operate in your neighbourhood. As the seller, you are liable for the commission that is paid to the estate agent, which averages around 7% (excluding VAT) of your final selling price. Their fee will include advertising your property, finding a suitable buyer and acting on your behalf between the attorneys and buyer. This amount is usually paid from the proceeds that are derived from the sale. You should consider the desired amount you want for your property, and then speak to the estate agent about factoring their commission into this figure.
Remember, that the estate agent's commission can be negotiated and is done so in writing by means of a mandate, which also outlines the terms and conditions regarding the sale of your property. This mandate is a binding agreement between you as the seller and the estate agent. The two common mandates are either open or sole mandates. An open mandate signed with the estate agent means that they do not have exclusivity in selling your property. This means you are not restricted to using only one. A sole mandate provides exclusive right to the selected agent for a particular period. Ensure that you're comfortable with your choice and only make decisions that best suit you.
Step 3: Welcome to Show Day
When your house is officially open for public viewing, make sure it is well presented inside and out. Take note of the following tips to enhance your home's appearance:
• Store away unnecessary items to avoid clutter - clear surfaces make things appear more spacious
• Ensure that all beds are neatly made up and furniture arranged neatly
• Lock away any valuables • Some estate agents even advise preparing a pot of coffee to give the house ambiance
• Again, pack away items that are lying around the house that make it look untidy
• If the property has a garden, make sure it has been recently tended to
• Clean the pool - sparkling blue water is very inviting
• If time allows, touch up paint and neaten up where needed. However, do not 'cover up' any defects - it is always advisable to disclose any to the estate agent or potential buyer
Step 4: Suitable buyer found
Once a potential buyer has been found, they will make an offer on the Agreement of Sale. If you sign this agreement, it means that you accept the offer. The agreement of sale, also known as the Offer to Purchase, becomes a legally binding agreement outlining the terms and conditions of the sale. The buyer now sets out to find finance, if required, from a commercial bank and if successful, the legal process will be initiated for the transfer of the property. It is a good idea to ensure that the sale agreement has particular parameters in place such as a time frame in which the buyer is to obtain finance, where after the agreement will be null and void. This will ensure that the sale process is not delayed too much. Remember that in most instances all fixed items are considered part of the sale, so ensure that any items not part of the sale are clearly listed.
Step 5: Legally speaking
As the seller you get to choose the transferring attorney and the buyer will pay for their fee. If you have a mortgage bond registered over your property (the property is still financed), a cancellation attorney will be allocated to cancel it and will liaise with the financial institution concerned. If you are buying a new property at the same time, you can request the same transferring attorney dealing with the purchase to act on your behalf for the sale. In this way, you can negotiate a reduced fee for the referral business and also limit the number of people involved. Ultimately this can save time and potentially costs in the entire process.
The attorneys are there to assist with the legal aspects of the sale and purchase of a property. They are also knowledgeable on the municipal requirements that come into play with such transactions. They will advise you of your responsibilities as the seller and even refer you to other professionals if the need arises.
Step 6: Point of departure for bondholders:
You should notify your bank in advance ofthe pending sale. This is in addition to the attorney requesting cancellation figures/letters of guarantee for the existing mortgage bond. This can be done even before the property is placed on the market. It presents an ideal opportunity for you to seek advice on finance options for the new property as an existing customer
Step 7: Process and Costs involved:
Once the property is sold, you or your nominated attorney needs to send us instructions to cancel your home loan. Please note that a 90 day notice period is required by the bank to cancel the bond. You may give this required notice yourself or you can leave this task to your attorney. If, for whatever reason the bond is cancelled before the full 90 dsays notice is up, the bank will waive the fee for the portion of the time period from the start of the 90 days to the day of cancellation. If for whatever reason the bond is not cancelled within the 90 days notice period, the cancellation process continues (without you having to reapply for an additional notice period) until the cancellation happens. This means that no additional penalties will be levied to the account. The 90 days penalty interest will be waived in full. If after 12 months, cancellation of the bond still has not occurred then only will a new request to cancel be required. New cancellation figures must be requested by the attorneys every 3 months.
The subsidy amount will be based on the Law Society's guidelines for the cancellation of bonds registered at the Deeds Office.
Amounts included in the cancellation figures
• The payoff amount, as at the date that the figures are issued
• Any homeowner's insurance premiums that would have been debited to your bond account in the next three months. This ensures that the property is insured until the date of cancellation. This usually takes three months, but the process may be held up for various reasons.
• Any life assurance premiums that would have been debited to your bond account in the next three months are included, if applicable.
• Legal costs, interest, retention amounts and any early termination interest are all included where applicable.