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Selling a home and buying a new one, what should you be aware of?

Selling a home and buying a new one

The majority of home sales in South Africa are as far as possible timed to ensure that you, the seller, can buy a new home and move into it directly from the sold home – or as close as possible to the date you vacate it. In most cases you as the seller have to achieve a sufficiently satisfactory sales price to cover the deposit on the new purchase (usually set at 10% of the sales price) and you must have sufficient funds to pay the transfer registration costs, the transfer duty due to SARS and the bond registration costs.

A common problem when selling a home

Sellers should take care when selling a homeHowever, in a surprisingly large number of cases it becomes apparent that after signing the offer to purchase the seller has not made provision for the extra funds needed to ensure the transfer. This is often due to a lack of research about the costs that will be incurred, e.g. the upfront payment of transfer duty due to SARS, and to ‘poor education’ of the client by the estate agent.  In cases of this kind the seller could potentially find himself in breach of his contractual obligations on the new home he has purchased because of the payment by the first buyer being held up. When this happens, the seller down the line is entitled to sue the other seller. The first seller will usually have to resort to arranging a personal loan or bridging finance as quickly as possible to facilitate the uninterrupted continuation of the transactions.

What you can do

To avoid landing in this predicament, if you are looking to sell immovable property (for example, looking at selling a home), it is advisable to contact your conveyancer  before signing the offer to purchase to confirm that the buyer’s extra costs have been understood and can be met. It is essential to do thorough homework before entering into these linked sales agreements, where a subsequent transfer is dependent on the first going through on time. For further help do not hesitate to contact us at info@gunstons.com.

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