SELLING PROPERTY IN CAPE TOWN, SOUTH AFRICA
Before you begin
Setting an asking price
Do it yourself or use an estate agency?
Appoint an estate agency
Marketing your property
Preparing your property for sale
Receiving an offer
The “cooling off” period
The costs of selling
SELLING a property in Cape Town, South Africa involves a lot of preparation and activity. The following is a general guide to the process.
Before you begin
Before you sell your property, you need to decide:
- the price you will ask for it
- how soon you need to sell it
- whether you will sell it yourself, or use an estate agent.
Setting an asking price
There is no such thing as a fixed price for a property. The value of any property is determined by how much a buyer is willing to pay for it at the time it is being offered for sale. In the case of a house or an apartment, this is usually influenced by the prices being paid for other properties in the neighbourhood, and by the condition and features of your property.
The simplest way to set your asking price is to ask an estate agency for a written "comparative market analysis". This should be free of charge and it will not commit you to appointing the estate agency to sell your property for you. Always try and ascertain what properties were actually sold for and not necessarily what they were advertised at!
You can ask more than one estate agency for a comparative market analysis, but you should find that they all present you with similar figures. If any estate agency gives you a price that is markedly higher than the rest be suspicious: it may be a ploy to persuade you to give it a sole mandate. A very low valuation on the other hand could give buyers the impression that you are a desperate seller.
You can also call in a professional valuer to value your property, but he or she will charge you a fee. Unless you have some special reason for needing a professional valuation, an estate agency's market analysis will be quite sufficient.
Every property has more than 1 price…
- What you the Seller thinks its worth.
- What the agent values it at- The Comparative Market Analysis.
- What the buyer is prepared to offer.
- The final settlement price.
Please beware of over valuation! It can damage the sale because:
- It loses prospective buyers
- It eliminates offers
- It reduces the agents efforts
- It reduces the agents enthusiasm
- It limits financing
- It is used as a bouncer
- It eventually means a lower price
Pricing guidelines --- what is the market value of your property?
- What you paid for your home has nothing to do with its present value.
- What you need to purchase a new home doesn't determine its value.
- The price you would like to achieve for your home doesn't control the asking price.
- The value other agents put on your property is not always accurate.
- What I say your home is worth need not necessarily be correct.
- What a valuator says your home is worth doesn't determine the price in the market.
The current market determines the value of your property.
It can take weeks, or even a few months, to sell your property, and a few months more to transfer ownership to the buyer. You will probably only be paid after transfer. As a general rule of thumb,
A house listed within 10% of the market value takes 30 days to sell
A house listed within 20% of the market value takes 60 - 90 days to sell
A house listed at more than 20% higher than the market value takes more than 100 days to sell
Sell it yourself or use an estate agency?
You are entitled to handle the selling process yourself, and many people do just that. However, the majority of sellers prefer to pay estate agencies to do the work and attend to all the details. Choose a reputable, experienced agent with a proven track record and who knows the area personally - boundaries, zonings, amenities, schools, hospitals and future developments. Once you have decided on an Estate agent, you become a team. On this page, we will assume that you choose to use an estate agency.
Appoint an estate agency
If you decide to sell through an estate agency, you have the choice of
- appointing only one estate agency — this is called a "sole mandate"
- appointing two or more estate agencies — this is called an "open mandate".
The advantages of a sole mandate are:
- security — only one estate agent will have a key to your property
- maximum advertising
- convenience — only one estate agent brining potential buyers to look at the property
- no pressure — the estate agent isn't competing against others to find the buyer first.
An Agency with a Sole Mandate should provide you with the following:
- To qualify buyers before bringing them to your home.
- To give you regular reports and to follow up all leads.
- Development of a buyer profile
- Contact qualified buyers
- Prepare photographs for window and advertising displays
- Submit to you a schedule of show days
- Inform other agents of your property
- Viewing, by appointment only
- Initiate a Show house campaign
- Perform intensive marketing
- Include your property on their Internet site
- Compile and advertising strategy and plan
- Submit a weekly progress report to you.
If you grant a sole mandate, the law requires that it must be in writing. The estate agency will probably provide a printed mandate document — it should contain the following details:
- the address of the property
- your asking price
- an expiry date — this is compulsory and the estate agent is not allowed to extend the mandate beyond that date unless you have agreed in writing
- the legal implications to you if you should sell the property yourself or through another estate agency
- what the estate agency will do to market your property
- any other terms and conditions.
The advantage of an open mandate is that you will have more people advertising and looking for buyers for you. But the big disadvantage is that there is a risk that two or more of them will find the same buyer, and you will have to pay full commission to both of them: one for "introducing" the buyer and the other for negotiating the sale.
Naturally, you will pay the estate agency a commission for selling your property for you. It can be either a flat fee, or else a percentage of the selling price. The percentage-based commission is probably the most commonplace.
There is no fixed commission rate in South Africa. Every commission must be negotiated between the seller and the estate agency. The recommended rate is 7½% (plus value-added tax), but this can be negotiated.
Commission is normally paid only after ownership of the property has officially been transferred into the buyer's name.
Marketing your property
South African estate agents work hard for their commissions. You can expect that your estate agent will do some or all of the following to find you a buyer:
- display a "for sale" sign on your property
- display an advertisement in its office window
- advertise in the newspapers and/or on the internet
- contact any buyers whom they think might be interested
- hold showhouses (typically on Sunday afternoons)
- bring potential buyers to look at your property.
Preparing your property for sale
You should make your property look as smart and attractive as you can before you offer it for sale. We suggest the following:
- garden and yard — cut the grass, weed the garden, remove any rubble - It is worth going to the expense of a few shrubs or flowers which will liven up the garden. If your lawn is brown, start watering regularly. Mow and trim the edges. Don't leave anything lying around which could give the garden a cluttered appearance.
- outside of the building — paint, wash, clean up
- rising damp or a leaking roof? – have it seen to immediately
- kitchen — make the stove, refrigerator, sink and floors spotless and gleaming
- repaint areas that seem a little drab – use neutral colours
- wash down any dirty walls that have not been repainted
- mirrors and windows should be cleaned
- bathroom — make it neat, spotless and fresh
- plumbing — repair dripping taps (faucets)
- steam clean your carpets and ensure tiles are gleaming
- lights — make sure all the lights work, clean the shades
- sometimes rearranging the furniture creates a feeling of more space
- hardware — oil door hinges, tighten doorknobs, replace missing keys
- cupboards (closets) — pack them neatly to avoid the impression that they may be too small
- spaciousness — remove unnecessary items from rooms to make them as spacious as possible.
Important! If you know of any defects, such as a leaking roof, you must tell the estate agent and/or the buyer before you sign any contract.
- The first impression for the buyer is the garden and the outside appearance of your home.
- A pretty neat garden makes a good impression.
- Exterior walls, woodwork and gutters need to be good repair.
- Your front door - make sure it invites the visitors in.
- Make it as bright and light as you can.
- Keep the house neat and uncluttered
- Freshen up the carpets, paintwork, floors, doors and replace novilon if necessary
- Place fresh flowers in a vase
- Repair any hairline cracks, cracked window panes, broken light fittings and kitchen counter tops
- Keep garage tidy
- Cut back trees and creepers from in front of the windows
- Make the patio, paths and pot plant containers attractive
- On a show day make sure the visitors can view all the outbuildings
- Make sure that taps don't leak, that the toilet flushes and that the water pipes run free
- Ensure that all light bulbs are working
- If you have a pool - let it sparkle and make your pool and patio areas attractive.
- Ensure that you know which items in the house and garden are fixtures and fittings
- Create a homely atmosphere by putting out magazines and fresh flowers throughout the house – have some soft background music playing
- Lock up any valuables
- In summer, have as many windows open as possible; in winter, use some form of heating, if necessary
- Keep your rates and taxes and electricity and water bills handy
- If you had planned to have any alterations or additions done and these were approved, make sure that these are available for viewing
- Keep dogs away and make sure the garden is free of “doggy poo”
- Keep in the background and let the agent do the talking. Be prepared to answer any questions openly and honestly. Comment only when asked to
THESE ARE JUST A FEW HINTS BUT LOOK AT YOUR HOME AS IF YOU ARE THE BUYER BECAUSE THE BETTER IT LOOKS THE BETTER THE PRICE.
Receiving an offer
Once the estate agent has obtained a written offer from a buyer, he or she must present it to you for a decision. You can:
- accept it as it is
- ask for some of the conditions to be changed (this is called a counter-offer)
- reject it.
If you accept the offer as it is (or after negotiating a counter-offer), you must sign the document. This makes it a binding contract. By law it must contain the following information:
your name and address
- the buyer's name and address
- the property address or erf number or section number
- the price the buyer is offering to pay
- whether or not the buyer is entitled to a "cooling off" period.
The offer will probably also contain some or all of the following clauses:
- how the buyer will pay for the property — typically 10% on acceptance of the offer and the balance on transfer of ownership
- whether or not it is conditional on the buyer obtaining a loan — if so, state how much the loan should be and set a deadline for obtaining it
- whether or not it is conditional on the buyer selling another property — if so, state the address and set a deadline for selling it
- the date on which the buyer can occupy the property — if it is before the date of transfer, the buyer should pay you "occupational interest" every month until transfer
- you must provide a certificate to state that the property is not infested by wood-destroying beetles — this is often asked for though it is not required by law
- you must provide a certificate to state that the electrical system complies with government safety regulations
- a list of any fixtures and fittings which you are selling as part of the property
- you are selling the property "voetstoots" — this means that the buyer accepts the risk that it might contain defects and will not hold you liable for them (unless you knew about them and did not tell the buyer)
- if the property is sectional title: a clause stating whether or not the developer or the body corporate has reserved the right to extend the scheme — if it has and you do not disclose this, the buyer can cancel the sale
- any other conditions of sale.
The "cooling off" period
If the price is R250 000 or less, the buyer will be entitled to a 5-day 'cooling off" period, during which he or she can reconsider the offer and cancel it if he or she wants to, without being in breach of contract. The following conditions apply:
- the buyer must be a "natural person", not a company or a close corporation or a trust
- the buyer must be buying for him or herself, not on behalf of someone else
- notice of cancellation must be in writing and must be signed
- notice must be delivered to the seller within five days after the buyer signed the offer to purchase — this excludes the day on which the offer was signed, and any Saturday, Sunday and public holiday
- if, during the "cooling off" period, the buyer signs an offer to buy another property, it automatically cancels the offer to buy the first property — unless the buyer wants to buy both
- if the buyer has paid any money, such as a deposit, you must refund it in full.
A buyer does not have the right to the "cooling off" period if:
- he or she is buying on behalf of another person or a company, close corporation or trus the property is being sold by auction
- the buyer and seller have already signed a similar contract for the sale of the same property
- the buyer is exercising an option to buy, which has been open to him or her for at least five days.
Once you has accepted the buyer's offer, you have sold the property. However, it legally remains your property until the details of the sale have been registered in the Deeds Office and the official records have been changed to transfer ownership from you to the buyer. This usually takes a few months. The transfer process involves some or all of the following steps:
- you nominate an attorney (conveyancer) to carry out the process — by law only a qualified and registered conveyancer is allowed to draw up transfer documents
- you (or the estate agent) supply the conveyancer with the deed of sale, the electrical compliance certificate, the beetle clearance certificate (if applicable), and proof that the buyer has been granted a loan (if applicable)
- the conveyancer checks the title deeds of the property
- the conveyancer draws up the transfer documents and has them signed by you and the buyer
- the conveyancer obtains a rates clearance certificate from the municipality (or, if the property is sectional title, a levy clearance certificate from the body corporate) to show that the rates or levies have been paid up to date
- the conveyancer pays the transfer duty to the SA Revenue Service on behalf of the buyer, and obtains a receipt
- the conveyancer lodges all the documents, the rates/levy clearance certificate, and the transfer duty receipt, at the Deeds Office
- the conveyancer obtains the purchase price from the buyer
- the Deeds Office scrutinises the documentation — if they are in order they register them, but if they are not in order they return them to the conveyancer for correction and resubmission
- if the purchase is being financed, e.g. by means of a bank loan, the financier's conveyancer (who may or may not be the same as yours) draws up the mortgage bond registration documents for you to sign — these documents are usually lodged at the Deeds Office together with the property transfer documents
- after transfer has been registered, the Deeds Office issues the official deed of transfer to the new owner.
Costs of selling
It will cost you money to sell your property. You can expect to pay some or all of the following:
- the estate agent's commission
- the cost of the beetle inspection (and any repairs that may be necessary)
- the cost of the electrical inspection (and any repairs that may be necessary) — unless you already have an electrical compliance certificate.
If you currently have a mortgage bond, you will have to cancel it, which will cost you:
- the balance of the loan covered by the bond
- the bank's fee for cancelling bond
- Deeds Office registration fee.
Ask the estate agent for a written statement of these costs.
Please note: The above guide to buying property in Cape Town and South Africa has been compiled in good faith, but we accept no liability for any errors, or for any use that is made of it, or for any problems or damage that may arise as a result of using or acting upon this information.
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