Is signing a sole mandate the right choice?
Is it better to work with one estate agent or work with many? Many homeowners feel that if they sign a sole mandate with an agent they are reducing their chances of finding a buyer in the most optimum time frame and for the highest price. However, according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, while homeowners may think they are limiting their chances by signing a sole mandate, the truth is that it will be far more beneficial to them than they think.
“Signing a mandate means that the homeowner is giving the real estate agent an exclusive contract to market and sell a specific property. It is then up to that agent to find the right buyer for the home, ideally achieving the highest possible price within the shortest time frame. The agreement also allows the agent the right to deal with all of the legalities that are involved in the property sales transaction,” explains Goslett.
According to Goslett sellers have two options when it comes to mandate agreements – an open mandate or a sole mandate. If a seller opts for the open mandate route they are taking the exclusivity out of the deal. This means that multiple agents, often from a variety of agencies, will be working to secure the sale. “As with most options in life, an open mandate has its pros and cons. While there are several agents tapping into their network to find the right buyer for the home, it can bring about complications and there is always the chance of a possible double commission claim. An open mandate allows for a wider net to be cast, however in doing so also opens up the potential for confusion as to which agent was the effective cause of the successful sale,” says Goslett. “One agent may have signed a sales agreement with a buyer, but it could have been the result of another agent’s advertising and marketing.”
Unlike a sole mandate, which is a written agreement, an open mandate can simply be a verbal agreement between the parties. If there is no written agreement in place, certain aspects could be misinterpreted, which could cause conflict. A clear, written contract protects both the seller and agent, reducing the risk of any misunderstandings. “A written contract will also ensure that the agent puts maximum effort into fulfilling the goals that have been set. If an agent is working on an open mandate they may be less inclined to spend as much time and money marketing the property, which will reduce the home’s chances of selling,” says Goslett.
Conversely, a sole mandate is a legally-binding document that must be reduced to writing. Within the agreement, an agent is given the exclusive right to sell the property for a period of time. During the allotted time frame, the seller may not appoint another agent to market the property. In the event that the seller is not satisfied with the service they receive from the selected agent they can appoint another agent once the sole mandate period has elapsed. If a homeowner has signed a sole mandate they will still be entitled to market and sell the property themselves, but only if it has been confirmed in writing with the estate agency that has been awarded the mandate. In an instance where the homeowner does sell their property, they may still be required to pay a fee to the sole mandated agent.
“Homeowners can opt to give an agent an exclusive sole mandate, which is the same as a sole mandate but slightly more restrictive in that the homeowner is not allowed to sell the property themselves. An optional term of an exclusive sole mandate is that the seller may authorise the agent to accept or reject an offer on their behalf,” Goslett explains.
He notes that the reason for a sole mandate is to ensure that the transaction is handled in the most efficient way possible and all parties are protected. “It is highly beneficial for sellers to have a sole mandate in place, which is why most financial institutions and estate agencies recommend that sellers have one in place. Having a sole mandate will ensure more effective marketing of the property and an orderly conclusion to the sale,” says Goslett.
From a logistical standpoint, a sole mandate makes more sense because the seller only has to liaise and deal with one agent, not several. This simplifies the process with far less time spent coordinating the seller’s schedule with the various agents. It is also better from a safety perspective, as only one agent will have access to the property.
Goslett says that before sellers sign any mandate, they must know that they are working with the right agent for their needs. “It is imperative that sellers select a qualified agent with a valid Fidelity Fund Certificate (FFC).The agent should also provide the seller with a marketing plan for the property. If at any stage during the process the agent is not following the marketing plan they have provided, the seller will have the right to cancel the mandate,” he says. At all times the agent should work according to what is in sellers best interest, giving sound professional advice and assisting them to make the right decisions - especially when multiple offers have been presented.
“While sellers might be inclined to think that signing a sole mandate is restricting their options, it is actually an opportunity to simplify the property sales process by working with one reputable, experienced estate agent. It will ensure that an entire team within a real estate network is cooperating to sell the property within a reasonable time frame at the best possible price,” Goslett concludes.
17 Oct 2016
Author RE/MAX SA