Preparation of the sale
1. Make sure that all known defects are resolved. I had to replace my brake pads and discs, two rear tyres and wiper blades. If you have a conscience as a seller, you'll feel good that at the end of the day that you sold a car that has no issues that you are aware of plus it all adds up to being honost to the buyer.
2. Optional. Get a multi-point check done on the vehicle. Dekra is the company that is associated with that AA that carries out these checks. This does include a roadworthy test as well. If you really want to go the extra mile, you can have a technical inspection done which can take around 2 to 3 hours to complete. This just gives the buyer confidence. The only snag here is that Dekra could point out issues that you were not aware of that could cost you thousands to repair in order to clear your conscience. More details http://www.aa.co.za/36/vehicle-tests/ or http://www.dekraauto.co.za/
3. Optional. The seller can have the vehicle roadworthied beforehand, but since the roadworthly certificate is only valid for 21 days, it is recommended that the buyer do this. The buyer is required to hand this in, together with the "Blue" form and other supporting documentation.
4. Go to your local traffic department and pick up the following:
4.1 One "Yellow" Notification of Change of Ownership/Sale of Motor Vehicle form. http://www.capegateway.gov.za/other...change_of_ownership_or_sale_motor_vehicle.pdf
4.2 One "Blue" Application for Registration and Licensing of Motor Vehicle form. http://www.capegateway.gov.za/other/2006/3/rlv_app_registration_licence_motor_vehicle.pdf
The 'blue' and 'yellow' forms can also be found at: http://www.enatis.com/newsite/index.php?option=com_docman&task=cat_view&gid=8&Itemid=18
(the links in OP were down over the weekend when I needed them)
I am going to refer to the "Yellow" and "Blue" forms within the context of this post.
5. Download a sales agreenment and print it out. Found one http://www.cooperattorneys.co.za/Vehicle/sale of vehicle.pdf
6. If you've paid off the vehicle, which I have, have the proof of ownership documentation with you as well the letter indicating that the car has been paid off. This letter is sent to you by the bank after you have settled the vehicle finance. If you're selling your car after you have transferred owership from the bank to yourself, then your Registration Certificate is proof enough that the car has been paid off.
If you have not paid off your vehicle as yet, request a settlement letter from the financial institution with whom your vehicle is financed through. This letter contains the settlement amount and it is generally a good indication that the car isn't stolen, etc.
You should also be in possession of the Registration Certificate of the vehicle which you'll need to hand over to the buyer.
7. Take the car for a major valet. Got those seats cleaned, esp if your car is a family car where on occasion your toddler has spilt food or drink on the seats. I did that and the seats are stain free and the car is shiny and clean.
The Sale
8. Advertise your car online (Gumtree, OLX, JunkMail, CarFind, Autotrader, etc) Make sure that you attach good and clear pictures of the vehicle. Also add a good description of the features and even include the reason for selling the car. Word the ad in a warm and friendly tone. Be honost and include any extras like it having iPod connectivitiy for example. If you decided to go with the AA multipoint check and roadworthy, indicate that in your ad as well.
9. Viewing of the vehicle by the buyer. This is your first person-to-person contact with the buyer and can be a nerve wrecking experience since you are trusting that your prised asset does not go bye-bye by some opportunist. Although we try to be a good judge of character by the initial phone call, decide based on your gut where to meet the buyer. Avoid corresponding with a potential buyer over SMS or e-mail. Go back to basics and speak to them on the phone.
Two possible suggestions are to get the buyer to come to your house or to a busy service station. Service stations generally have many people around and have CCTV cameras, so if there is an issue, the CCTV will be the watchful eye. Never meet them at their place of residence. It is up to you as to whether to invite them to your house to view the vehicle.
10. Make sure you have a friend / family member with you when buyers come and see the vehicle. You'll find that the buyer will also bring a friend / family member along for advice.
11. Keep your car keys at your side at all times. When going for a test drive, get into the front passenger seat while your friend / family member gets in at the back and then hand over the keys.
12. Once the buyer has indicated that they are interested in the car, confirm how they are going to finance the vehicle. A cash paying buyer is of course, the best and simpliest option.
12.1 If they are paying cash, require them to do EFT only. No cheques - not even bank guaranteed cheques or cheque deposits either.
12.2 Question: If they need to finance the car, what is the steps that need to be followed here?
13. Fill out the sales agreenment as mentioned above and both parties must sign. This is a binding contract. Question: Does the Consumer Protection Act apply here in terms of a 7 day cooling off period?
14. The buyer and seller must both fill in and sign the "Yellow" form from the traffic department. The buyer must fill in and sign the "Blue" form.
15. Request a copy of the buyer's identity document and drivers license. You want to sell your car to a licensed driver after all. Also keep in mind that you'll need to make a copy of your identity document as well which is to be submitted with the relevant forms to the traffic department.
16. Never let the vehicle leave your house without payment in full. Make sure that the funds are in your bank account and that they reflect as such. Cheque deposits reflect as an entry on your bank statement, but the funds are not available as yet until they clear. Make sure that the funds are available in your account. There have been many cases where a seller takes the proof of payment as gospel, but never checks that the funds actually cleared. Once that is the case, you can release the vehicle to the buyer.
17. Once the buyer has paid for the vehicle, agree on a date of collection of the vehicle. Again, rather get them collect it. Much easier on the logistics. 
18. Besides the keys, provide the buyer with the spare key and any accessories that form part of the vehicle that are not attached to the vehicle (blinds, nets, etc). Provide the buyer with the following documents:
18.1 Proof that the car has been paid off if it was previously financed.
18.2 The "Blue" form from the traffic department filled in and signed.
18.3 Current Registration Certificate. If you do not have your Registration Certificate, you can obtain a new one by filling in the peach "DRC" form and paying R165 at the traffic department.
18.4 Copy of your identity document.
18.5 Roadworthy certificate if you decided to do the roadworthy yourself.
18.6 A receipt as proof of the sale.
18.7 Optional. Draw up an agreenment between the seller and the buyer indicating the date and time of the collection of the vehicle and that all fines incurred before transfer of the vehicle are his responsibility. Keep in mind that legally you, as the current owner, according to the traffic department, are still responsible for the fines incurred after the buyer has taken delivery and it is important that you hand in the yellow form to the traffic department as soon as possible to minimise the risk. An agreenment of this nature could possibily act as a scare tactic which could bind the buyer to drive responsibly.
It is advisable that you make copies of all documentation for your own purposes.
After the sale
18. As the seller, hand in the "Yellow" form to the traffic department. The buyer needs to hand in the "Blue" form as well as roadworthy documentation and registration certificate.
19. I believe the only time when new plates are required is when the buyer registers the vehicle in a different district. Eg. if the car has a "CA" reg and the buyer lives in Bellville, the buyer will get a "CY" reg.
19. Done! Now you can use the proceeds of the sale to finance your next vehicle.
Well that is it. Please comment below so that I can make this a concise step-by-step guide.
Extra Info
To answer your questions:
The buyer must get a receipt from you saying that you have sold him the car and that it is fully paid for. He should also get a blue and a yellow form, signed by you, signing the car over to him.
I would then do an extra yellow copy for myself and make sure that I personally hand that in, as that is what new owners sometimes forget. It effectively gives him 21 days to get it into his name.
I would also draw up an agreement that he must sign, stating that he took delivery of the car at X time on X day, and that he is liable for any traffic fines from that time onward.
Who Sould hand in the Yellow form
The BUYER and SELLER fill in the yellow form, but the SELLER hands in the yellow form. Very important, do NOT give the yellow form to the buyer to hand in, if he forgets it's YOU the seller who gets in the ****, not the buyer. Until that yellow form is handed in, the SELLER is responsible for all traffic fines, etc that the BUYER incurs after buying the car, so it's important that you, the SELLER, hand it in as soon as possible after selling the car.
Only the BUYER fills in the blue form and hands it in.
Roadworthy can be done by whoever as long as it is less than 6 months old. Bottom line is that the car will not be allowed to be transferred unless there is a less-than-6-months old roadworthy certificate to go with the transfer.
Phone your finance bank and ask for a settlement letter. This will show the outstanding finance amount which the bank is willing to accept in full and final settlement of your debt to them.
The settlement letter is also, sort of, proof for the buyer that the vehicle is legit and is not stolen etc. The downside is that a settlement letter is usually only valid for 14 days - so, as a buyer, you want to make sure the settlement letter you receive is up to date.
If I were the buyer, I would ask for this letter and pay the amount directly to the bank (with proof of payment sent to the seller). Once the seller has received the registration papers, I would pay the net amount left to the seller. If I were the seller, I wouldnt have any issues with this (because proof that the buyer has paid is easily confirmed) but I would record that if the buyer opts for this method, any payment by him is at his risk (so if the bank made an error on the bank details / reference number - it does not constitute payment by him to the seller).
Also
1. The seller is responsible for the roadworthy and has to have this done before sale of the vehicle. This is by law. The roadworthy needs to have been done in the last 6 months (not 21 days as stated).
It costs around R200 at the Department of Transport but depends a bit on where you go.
Note: don't bother wasting your money on this if you are selling to a company that resells vehicles or trading it in. Companies like that do their own and it costs them less. They will also cover all registration.
2. The buyer is responsible for change of ownership and registering of the vehicle (both blue and yellow forms but seller must sign yellow form) and this must be done within 21 days (actual days not working days). Personally I prefer to do this myself in a private sale just to make sure.
It costs around R120 for change of ownership and for registration R69 + penalties and arrears + licensing which depends on tare mass (R250 for an average hatchback).
3. The license plate remains the same unless you are registering the car in another province. The buyer will receive a new registration number and can then purchase license plates. This is their responsibility; do not get involved.
4. As buyer, when handing in both yellow and blue forms (at the same time, yellow form sign by seller or bank proxy) you must also have a copy of their id (or bank proxy id), your id and the Registration Certificate.
5. The Registration certificate is the most important - you should never pay until you have seen this and confirmed that all the details on the form match the vehicle itself i.e. VIN number, year model etc.
6. Some advice: use mytransunion.co.za to check a vehicle once you are serious about buying it. You will need VIN, engine number and registration number. You can get a valuation, registration details, accident history (only those reported to insurance) and a police clearance. R110 for an all in one report.
7. Hortors also have an excellent Offer to Purchase for R20. I just make a copy and reuse it
1) The seller hands in the yellow form
2) The buyer hands in the blue form
That's it. It very clearly explains on each form.