Selling your property? Make sure to sign an exclusive mandate
Category Newsletter: Lead Article
Mandates offer mutual benefits for both property sellers and the agents they appoint.
Also referred to as a sole mandate, the exclusive mandate is simply an agreement whereby the seller of a property gives one agency the sole right, thus the mandate, to market and sell the property. By implication, no other agency is allowed to do the same.
It seems counterintuitive because the more the merrier, right? Not when it comes to mandates, says Skoko Sebola, Principal at Leapfrog Midrand. "The purpose of the mandate is to keep the process simple, sleek and streamlined to ensure the property sells at the highest possible price in the shortest possible time."
Beyond managing the risk of the process becoming a case of too many cooks, an exclusive mandate also helps to avoid the duplication of potential buyers and the very real risk of double commission claims by agents.
"An exclusive mandate is the best way to avoid disagreements about the pricing of the property, which is important to get just right in the interest of securing a sale as quickly as possible," Sebola explains.
The benefits of an exclusive mandate range from the practical to the far-reaching, such as having to deal with only one agent which means less admin, less hassle and theoretically more streamlined communication. With an exclusive mandate the agent is more incentivised to act in the best interest of the seller as the commission earned would be exclusively theirs. With an exclusive mandate there is need for only one, personalised marketing plan for selling the property, which means more focus and eliminates any possible confusion around what the agent's role is.
Consider too that it is in the best interest of the seller because the agent has the security of income and can risk more in terms of time, resources and money in marketing the property, which agents are often reluctant to do on an open mandate where they could do all the same, but then another agents takes the sale and there is no commission.
Another point that's useful to understand is that the sole mandate does not exclude another agency or agent from referring potential buyers, but the referring agent then needs to work through the sole mandate holder, and among the agents a commission structure will be negotiated if the referral leads to a sale, without it impacting the seller in any way. In fact, the seller needn't even know about it as it's merely another element of the marketing process.
"An agent's goal and indeed their mandate is to act in the best interest of the client. By agreeing to an exclusive mandate the client, in this case the seller, empowers the client to do this more effectively. An agent only "wins" when the client wins, which by implication means acting in the seller's best interest in the primary goal," Sebola says.
Should you go the mandate route ("highly advised", says Sebola), make sure to get the agreement in writing and stipulate clearly the length of time the mandate applies for. The document should also make mention of the selling price of the property, the agent's agreed-upon commission structure, as well as any other terms and conditions that may impact the mandate and/or the eventual sale of the property.
"There's plenty of anecdotal evidence to suggest that properties on an exclusive mandate sell faster and at a higher price, and it's something we definitely see time and again for ourselves," Sebola shares.
The ideal for the seller of a property is for the process to be fast, pleasant and streamlined, and granting a mandate is a key way of ensuring exactly this. "But don't, as the seller, shy away from asking the agent as many questions about it as you need to feel comfortable. A professional property advisor will have no qualms answering questions," Sebola concludes.
Author: Leapfrog Property Group
