In real estate, the words “sole mandate” or “sole and exclusive mandate” tend to get so many people excited.
One can understand why a property professional would get excited about getting one of these over a sellable property but why is it great for the seller:
1.BETTER PROTECTION AGAINST MULTIPLE COMMISSION CLAIMS
This is a real danger where there is not a mandated agent. Multiple commission claims are a real danger and very often owners make the mistake of exposing themselves to this very real danger. A sole mandate makes it very clear who is
A sole mandate makes it very clear who is authorised to sell a property and who not, which greatly reduces the chances of multiple commission claims. Please note that its is key that as the owner you do not authorise other agents during the course of a sole mandate.
2.PROTECTION AGAINST LEGAL ISSUES ARSING FROM COMMUNICATION FAILURES
Even in a relatively small city, like Port Elizabeth, big legal problems can arise for unsuspecting sellers who through have multiple agents and eventually loose track of what they told whom. So, it may happen that an owner forgot about a leaking roof, he tells agent A & agent C but forgets to tell agent B who eventually sells the property. In such a case the owner would be exposed as the necessary declarations concerning the roof leak were not made to the buyer in terms of the CPA. Also, it just makes sense to have one person you need to communicate through, let’s not even begin with scheduling problems etc.
3.PROTECTION AGAINST THE HOARDS OF AGENTS WHO TROLL FOR LISTINGS
An owner thinking it wise to have an open mandate should remember that it will attract a lot of attention, not from buyers but from agents. In Port Elizabeth, it was said we had over 1400 agents in our metropolitan area.
If only a small fraction of these start hounding you about marketing your property, you may need to hire an assistant to handle all the calls. In open listings, the focus moves away from quality service to a desperation to sell, which does not bode well for the seller.
Having one agent means they get to know you and when it’s convenient to call, your preferred communication medium, and when it’s the best time to bring buyers around. This means you will not get random call calls at all hours with desperate pleas for a viewing.
An agent with a sole mandate will know when its best to likely schedule viewings, will try to reduce inconvenience, will set standards for views like ensuring they are able to buy and will ensure that ensure that every name is noted. This will ensure that you are spared that bane of open mandates being harassed by the same buyers being brought through by different agencies or appointments being canceled at the last when the buyer realises he or she has seen it already.
5.COMMITMENT FROM YOUR PROPERTY PROFESSIONAL
Commitment is a two-way street and no more so than in the relationship between a seller and his or her property professional. So often a seller will state they will not give anyone a mandate because they do not want to be bound. then they proceed to appoint a number of agents. Property professionals/estate agents are commission based so no sales mean no pay and that means we are acutely aware of expenses and costs and cannot afford to really commit our resources where the chances of a sale are low. A salaried person would not be happy if at work a number of employees competed for one salary. If it happened that you were lucky you would get paid, if not you get nothing. This would be worse when one person puts in hours of work and is pipped to the post purely because a customer came in while they were out for a moment and someone who had not an investment, save being there at the right time benefitted.
Property professionals/estate agents are commission based so no sales mean no pay and that means we are acutely aware of expenses and costs and cannot afford to really commit our resources where the chances of a sale are low. A salaried person would not be happy if at work a number of employees competed for one salary. If it happened that you were lucky you would get paid, if not you get nothing. This would be worse when one person puts in hours of work and is pipped to the post purely because a customer came in while they were out for a moment and someone who had not an investment, save being there at the right time benefitted.
Exclusivity is often undervalued. This means that buyers can only get that property from one source being the agent who can then leverage the concentrated buyers to ensure an optimal outcome. It also ensures that the marketing message is consistent. So often, in open mandates, one agent will drop the price for example and this creates confusion in the marketplace amongst buyers and can compromise the seller.
This means that buyers can only get that property from one source being the agent who can then leverage the concentrated buyers to ensure an optimal outcome. It also ensures that the marketing message is consistent. So often, in open mandates, one agent will drop the price for example and this creates confusion in the marketplace amongst buyers and can compromise the seller. In essence, instead of a group working together for your benefit, you have a group of individuals whose interets are at cross purposes to each other, which is not desirable at all.
The correct property professional will screen buyers before bringing them through your home.
In Port Elizabeth, where I practice, I adopted a process of identifying the buyer and also ensuring that they had been preapproved before making an appointment for a viewing. This means that they are identified twice before the viewing and as an additional benefit, I know that they are able to buy.
Accountability is all the buzz at present but accountability does not do well with multiple agencies. The reason for this is that there are so many agents involved that nobody knows who is actually responsible for achieving the outcome or who is accountable for a mistake or error.
As the process progresses, assuming you have hired the right property professional, the relationship will develop. In my practice, I often find that you begin to know the client’s ways and what their preferences are. The development of this relationship is also important when the client needs to have trust in you as the property professional when its comes to making decisions. If you have not developed a solid relationship built on trust and commitment, a client may not trust you enough to take your advice when it counts. This may result in a lost sale, financial loss (as the next offer may be for less), frustrated plans, and even financial loss (because the offer eventually accepted may be for less).
10.SOMEONE HAS YOUR BACK
Commitment, trust, and partnership have the result that your property professional will have your back. It’s a tough market out there and knowing that you are looking after each other is the foundation of great results. I only work on sole mandates because it is extremely difficult to really commit resources on open mandates which are in essence a gamble but more so because open mandates often create and environment where my clients and my interests are not sufficiently aligned, which creates a high-stress environment for all parties.
I know that there will always be sellers who buy into the perception that its better to have multiple agents, which is a perception which does not have a basis in fact. In fact, since most agencies use the same key portals (and portals now detect and differentiate open/dual mandates) means that multiple agents actually really is not beneficial to the seller.
Find a number of good agents, interview them, check their credentials, check that they are registered with the EAAB, check their references and then make an educated decision. When you find the right agent, do yourself a favour and protect yourself with a sole mandate.
Clinton Begley (PPRE MPRE CEA B.PROC (NMMU)) is the co-founder, Principal/Director at BOLD REALTY, in Port Elizabeth, South Africa. In addition, to his passion for people and real estate, he is also an experienced trainer, coach, and mentor. He holds a B.Proc degree through the Nelson Mandela Metropolitan University and is a non-practising Attorney, Notary, and Conveyancer (with over a decade of experience). His legal and real estate experience is augmented by studies towards an MBA degree through the Nelson Mandela Metropolitan University Business School, which he is scheduled to complete soon.
This article reflects the personal opinion of the author only, it is NOT intended as legal advice nor may any reliance be placed upon it. The article is purely for information purposes and you are advised to consult an expert before making any decision.