I'm buying my first house, but the costs are confusing me...

Isis

I have a question for some of the property gurus on the board.

I am in the process of buying my first house (a nice little duplex with a garden ?) in a golf estate in Pretoria. Apart from some weird experiences with the estate agent regarding the negotiations on the price, I really like the property as well as the price. The one thing that bugs me though is the transfer fees. We settled on a price of R560 000, which exempts me from paying any transfer duties as the amount falls below the R600 000 threshold where 3% of the purchase price kicks in.

I contacted her today and she told me the transfer fees will amount to R31 800. That seems an awful lot to me for covering the bond and transfer costs. I don't know how much she is paying the conveyancer, but the people I spoke to told me this sounds weird. Another property I was interested in had the transfer costs at R32 000 and that included the transfer duties since the purchase price is R630 000.

I am making an offer to purchase on Sunday, so I'll query everything then, but I want to arm myself with some info before I pitch up and look like an idiot. I'm getting some hectic bad vibes from this agent particularly...

Oh, and one last thing, any tips from previous home buyers on stuff to watch out for? ?

Bob-Dubery

It is the seller, not the agent, that has the right to appoint the conveyancer. They may go with the agent's recommendation, but the prerogative is the seller's.

Note that there is no standard rate at which conveyancers must charge for their work. A different conveyancer, charging a different rate, may have been handling the other sale that you refer to. Also there are costs other than the 3% transfer duty (which is imposed by government).

Any reasonable conveyancer would not take umbrage at a request for a breakdown of the costs. I suggest you contact the conveyancer and clarify the charges.

nick

I'm no expert on this but having recently gone through this process the R31k transfer costs is a few thousand rand more than I paid on a place worth quite a bit more than your proposed property. Ask for a breakdown on the fees?

On transfer fees you dont pay over and above R600k I think, but there still is a SARS amount (bastards) you need to pay and then the lawyers fees. Then there is bond registration costs and attorney set up the document rip off costs..

Isis

Thanks for the advice guys. I'll get this sorted out asap before I sign anything. I looked at the average for fees charged by conveyancers for a property of that value and her number is abnormally high. Most of the sites I visited put the cost at around R20 000 on the low end, and R25 000 on the high end for the bond and transfer fees. There are a few items that might not be accounted for, but I don't think almost R10 000's worth of stuff. ?

The agent is handling all of this on behalf of the seller. She said this should be smooth sailing since she is using her tried and trusted "team". I don't know, maybe I'm being paranoid here, but I don't trust this lady as far as I can throw her... and I'm pretty good at throwing women around...

I'll definitely be asking for a breakdown of the costs. Having looked at all the ridiculous costs lawyers seem to rack up, I can see why people make jokes about lawyers being the scum of the earth.

ZarK

The table below gives the transfer fee, vat and transfer duty payable for Natural Persons, Companies and other Legal Entities. (2012)

Purchase price Conveyancing fee Post & Petties Vat (14%) Deeds Office Transfer Duty Total
R560 000 R8 500 R 650 R 1 281 R 450 R 0 R10 881

Above are the average transfer costs for a property valued at R560 000. It does not include any bond costs...

Correct that the seller, not the agent decides on a conveyancer. You, as the purchaser should already have a detailed breakdown of the bond costs prior to signing the offer to purchase as that is between you and the financial institution. If you are purchasing direct from the developer, the developer often has an in-house 'team': agent, conveyancer(s) and financial institution(s)/bond originator(s) but this team should assure a more speedy/streamlined transfer process and lower total transfer costs, definitely not higher... Legally you cannot be forced to use a certain financial institution, of course...

Hope it helps...

Bob-Dubery

I just checked the account for the last property I bought (the one I currently live in). Note that you're getting off lightly! The seller incurs fees as well - I was selling one property to buy another and had two lawyers accounts to pay.

I won't give amounts here, but I'll say that given what I was buying for relative to your price I don't think you're being that hard done by. The items on the account were

FICA identification and verification
Transfer Duty
Transfer fees (this is the lawyer's charge for the actual transfer)
Deeds Office fees
Deeds Office search
Postage and petties
Cost of drawing up the bond
VAT

So when somebody says "transfer fees" you need to check exactly what they mean. "Transfer fees" was one item on my account and did not include duties, deeds office fees and the costs of drawing up the actual bond.