6 hidden costs of buying a home
They say the costs of buying a home can be as much as 10% of the asking price, from admin fees to the more unexpected defects waiting for you. We spoke to an estate agent to uncover some of the most common cost surprises, to help you plan better:
1. Admin costs: Get the full picture
Make sure you have a clear idea of all relevant administrative costs if you are selling your home and buying another, as these will have to come from your savings:
- Buying: As a buyer you need to take into consideration the deposit, transfer duty tax, transfer attorney costs, building insurance, life insurance, home contents insurance, bond attorney costs and bond administration fees.
- Selling: As a seller you need to make provision for the estate agent's fee as well as for the various inspections (electrical, gas, plumbing, beetle, electric fences all need certification) which are a part of the offer to purchase.
2. Structural issues: Spend now, be grateful later
It's hard to know what's hiding behind every wardrobe, in the ceilings or under the floors so rely on a thorough seller's report or get a construction expert in to do a survey. By spending some money now, you'll save yourself headaches later.
- Sellers are obliged to declare patent and latent defects pertaining to: electrical systems, roof leaks, plumbing, air conditioning, underfloor heating, cracks, mould, flooding, dampness and more. Make sure you get this in writing and signed by the seller.
- For your own peace of mind, get your own structural builder's and/or damp report, or get a roofing expert in.
3. Know what's included and not
Traditionally, any fixture to the house - from curtain rails and doorknobs to air-conditioners - may not be removed when a house is sold. Yet these things often end up being grey areas and ending in resentment. Avoid confusion by:
- Making your own inventory of what should stay and getting your agent to insist the seller agrees to this.
- Considering the costs of replacing removable items such as outdoor furniture, pot plants and curtains.
4. Upscale your home, upscale your monthly bill budget
Moving into a bigger home? Then expect all costs to rise: rates and taxes, electricity usage from heating, cooling, pool pumps, garden maintenance and more.
5. Buying in a complex? Dig deeper
The value of your property is dependent on how well the block is run. Put on your detective cap and ask the body corporate some tough questions. Request:
- A copy of the rules and regulations, and whether these are regularly enforced (noise, pets, litter, etc).
- A copy of the latest financials to see what the body corporate has been spending money on.
- An update on special levies. Are they are about to raise levies or implement additional special levies - e.g. for building alterations or painting? Such costs will be for the buyer unless agreed otherwise.
6. Security costs: Making you feel safer
Security is a personal choice so even if there are measures in place, consider what will make you feel safe. For example, families have different safety needs to a retired couple or a single mom. Do you need the wall extended? Parking areas better lit? Alarm system updated? Set money aside to increase the security to your satisfaction.
Lee Gautschi is the owner of Lee Gautschi Properties in Harfield, Cape Town, and has been an estate agent for more than 13 years.
Take a look here for other articles from Santam that will give you further insight on what you need to know about buying a home.