The property selling procedure in Pakistan is somewhat the same across all housing societies and cities, with minor pre-requisites set by individual developers. The transfer process takes place in the office of the particular city’s land development authority. For projects that belong to private and registered developers, the transfer takes place in their assigned office.
Selling property is always easier than buying, it seems. Property sellers aren’t burdened with a pile of taxes imposed on real estate and they also don’t have to visit multiple clients because interested parties simply come to them. However, this does not mean you can just sell land without knowing the correct procedure. It may be more straightforward than purchasing, but it is certainly no piece of cake.
Here, we’ll guide you through the entire selling process. Let’s get started!
- Preliminary research
When you decide to sell land, it is advisable to check out the market rate of the property on your own rather than look for an agent immediately. When agents are assigned a selling task, their primary objective becomes finding a buyer so that the deal can be finalised as quickly as possible. In this attempt, they can undervalue your property. So, when you make up your mind about selling your property, do consult different avenues to get its accurate market rate first. Then, if you can, wait for the right deal to be offered.
After you are well aware of the market value of your property, you should find an agent. If you don’t know one you can trust, ask your friends, family or acquaintances.
- Agent’s commission
Agents work on commission basis, which is usually one percent. At times, they are willing to adjust the commission percentage according to the rate at which a deal is closed, but this is rare. Either way, you should sit down with the agent and finalise the commission percentage, as well as when it will be paid, beforehand.
In most cases, the commission is paid when you receive the full payment of property. Sometimes, it is decided mutually that a certain percentage of commission will be given to the agent once the buyer pays the initial deposit (bayana). Just make sure all these terms are ironed out well in advance to avoid complications.
- Token money
Once you find the right buyer, he has to give you token money. This is a symbolic amount that highlights the serious intentions of the buyer and essentially reserves that property for him. Once this is paid, give this prospective buyer a photocopy of the property’s original documents for verification purposes.
Here’s how this works: If the land falls in the jurisdiction of the land development authority, you have to submit an application requesting a visit to get these documents verified for the buyer. In turn, officials of the land authority will ask you and the buyer to visit on a certain day. On that day, in your presence, the buyer will be shown the records that authenticate that property.
- Initial deposit
Once the documents are verified, the buyer pays a certain amount of money as an initial deposit, widely known as the bayana. Usually, the deposit is 25% of the property’s selling price. At this stage, the stamp paper is also signed, with conditions set through mutual consent. The stamp paper clarifies the time period in which the buyer will make the remaining payment as well as the penalties imposed if he fails to do so.
If you change your mind about letting go of this property after receiving bayana, you are bound by law to return double the bayana amount as penalty. This, too, is mentioned on the stamp paper.
- No-Demand Certificate (NDC)
As the date of final payment approaches, you need to apply for the NDC. The transfer of property is simply not possible without this certificate, which is obtained from the private housing society’s office or from the city’s land development authority, depending on where your house or land is located.
This document certifies that you don’t owe any dues. It also includes information about taxes applicable on both the buyer and the seller, as well as the transfer fee and stamp duty. There is a certain charged associated with applying for an NDC, which is different for different developers. Once you receive your NDC, make sure you give a copy to the buyer.
Sellers are required to pay the CGT (Capital Gain Tax), which is 1% of the property value for the tax filer and 2% for the non-filer. The CGT is applied on properties that are sold within two years from their purchase date. This tax payment has to be submitted to the office of the housing society or the land development authority.
On the other hand, the buyer has to pay the following charges before property can be handed over: the transfer fee, stamp duty, CVT and TMA Tax.
- Transfer letter
The presence of both the buyer and the seller is critical when the transfer is taking place. The two parties visit the respective office on a particular day and the buyer hands over the payment in the form of a pay order, after which the officer transfers the property to his or her name and issues a letter detailing this transaction.
And finally, you’re done! Your property is no longer yours and you have been compensated. The pay order is often transferred into your account within a couple of days.
Now, you can rest. Because of these guidelines, you have avoided unnecessary complications and achieved the outcome you deserve!