Sellers are faced with the dilemma most of the time as to which type of mandate is the best? Must you give a sole mandate, open mandate or a dual mandate?
First lets look at the different options:
Open / Dual Mandate:
If you don’t like to be locked in to a fixed period contract or you want many agents to market your house at the same time, you could sign an open mandate with each estate agent. With this arrangement, whichever estate agent brings the buyer gets the commission and the other agents get nothing.
In fact, you do not even need to sign an open mandate but it is recommended so that issues like the commission percentage are agreed in advance of a sale and so that the estate agent can list your property on the property portals.
As the seller, an open mandate must seem an attractive option because you could have many estate agents selling for you and thus you would expect to get greater marketing exposure. Nothing can be further from the truth!
Exclusive Sole Mandate:
A single estate agent / Agency is authorized to market your property and, when the property is sold, the agent is paid regardless of who sourced the buyer (although it is usually the agent). As the seller, you are required to sign a fixed period contract, usually for 3 months or more. Currently an average property takes approximately 111 days to sell. Agents therefore usually requests a mandate for at least 4 months.
The estate agent who has the mandate with you may often market your property informally with other agents whom your agent trusts. If one of those estate agents refer a buyer to your agent, then they will usually get a share of the commission. However, this arrangement is not your concern and you only have to deal with the single estate agent you appointed. Your agent retains control of the selling process and you won’t get calls from other estate agents. You will therefore not have to deal with many agents coming through the property but only your agent.
The main difference between a Sole mandate and an exclusive sole mandate is purely the fact that with an exclusive sole mandate, as the owner of the property, you will not be able to sell it yourself. Many agents will inquire from the seller if they have anybody that they want to exclude from said mandate. A list of these people can be included in the mandate and the owner will then be able to sell to those people on the exclusions list him/herself.
So, we often get the question, why give a sole mandate? Below we have provided some advantages to choosing us as your sole agent:
Advantages of a sole mandate:
1) Only the appointed Agent/agency has incentive and time to concentrate and focus on the mandate. Agents work on a commission basis only making this incentive a strong motivating force in obtaining the best result for the seller by giving bigger commitment. The agency usually also leans towards bigger spending in terms of marketing.
2) An Exclusive Agent will give regular feedback and ensure that there is no threat of disclosure of confidential information.
3) All buyers are screened carefully. In some instances, seller may request only pre-approved buyers to be allowed to view the property.
4) The Seller is protected from double commission claims: Because the seller has only given one agency a mandate.
5) The agent will give you the option to host a show house of your property. In a very short period of time the agent will take through more buyers, with very little inconvenience for the Seller.
6) Establishes confidence and good report and feedback between agent and seller. You do not need to keep track of many agents.
7) The sole Agent will know and understands the Terms and Conditions the seller is able to accept. In line with the Code of Conduct of the EAAB ALL offers will be submitted for your approval.
8) You as the Seller will have fewer hassles, more control, more privacy, less inconvenience and better security.
9) The agent takes control cutting down the number of calls the seller has to make to other agents All the seller has to do is refer any queries to the sole agent. At Mikaya, we do not mind working with other agents of our choice.
10) Too many Agents can cheapen the property. This is a reality! Have you driven past a house with a dozen different signs in front of the yard? Doesn’t this just scream desperate to you?
Disadvantages of an open mandate:
1) You run the risk that none of the agents will put time and effort into actively marketing or advertising your property, because they all expect that someone else is doing it. This will cause your property to become "stale" and you will loose interest.
2) Open mandate properties tend to be merely added to a list and never looked at again.
3) On open mandates, Agents compete, thereby sometimes compromising the best price.
4) Mismanagement of price can result in a lower price being realized
5) Agents are less accountable on open mandates and you can expect much less feedback on the progress of the marketing.
6) With an open mandate, buyers will seek out the agent who will offer them the property at the lowest price. There is nothing so frustrating as seeing the same property being advertised by 10 different agencies and having 10 different prices. It will make the market wonder if the seller knows what price he/she wants.
7) With an open mandate there are usually no or less confidentiality.
There is considerable merit in considering the granting of a sole mandate to a reputable estate agent as such a mandate serves as incentive for the estate agency to focus its energy and resources on selling your property.
Importantly, the choice between a sole mandate or open mandate or even a dual mandate between two estate agencies remains the privilege of the seller and should be carefully considered when commencing the sale of your property.
I believe that for any seller, a sole mandate is the best possible option.
SOLE mandate = SOLD