There are three types of mandates that you can sign with an estate agent, and it is essential that you know how these mandates work and how it affects your sale and the outcome thereof before you appoint an agent to sell your property.
Open Mandate
If you prefer to sell your property through number of agents, and open mandate is what you need. This means that whichever agent brings in the sale will ultimately get the all the commission for the sale. Experts recommend that you negotiate with each agent about their commission rate and that you get a contract in place that binds the mandate and the expected commission. As the seller, there are many advantages to having many agents marketing your property, but there are also problems that may arise.
- Agents may become passive and not market your property as well as they should when they know that all their hard work may be in vain when someone else sells it.
- Competing agents may also push you hard to accept a lower price to beat the competition.
- Home viewings have to be coordinated between many agents, which could be inconvenient.
- Too many for sale signs on your lawn may look too desperate and put buyers off.
Multi-Listing Mandate
Some agencies have multi-listing agreements with other agencies, which means that once you have signed with one agent, your property is also marketed by other agencies in the multi-listing group. These agencies may then approach the buyer directly when they have a buyer, and the commission is shared between the listing agent and the agent who made the sale. Problems that may arise are:
- Commission may be higher as it has to be shared
- The agent may pressure the seller to accept a lower price
- It could be inconvenient when having to deal with other agencies you don’t know and arrange for all of them to have access to the property at odd times.
- They may spend less time and money on marketing because they may not get the sale
- Agents may spend more time on sole mandate properties in competition with yours
Sole Mandate
This is when a single agent is responsible for the marketing and sale of the property. It means that the agent gets the commission, regardless of who sells the property, even if you manage to sell it privately. Sellers are bound to a fixed term contract, which is typically 3 months, after which they have the option to reconsider or renew. If the agent sells the property through another agent, the other agent will usually get a share of the commission. Sole mandates usually charge less commission, but you are locked into the contract by only one agent, which means you have to choose very carefully to get a highly effective agent who will market the property well and bring in a good sale.
Once you have weighed up the pros and cons of all the mandates, you can make an informed choice that will benefit your situation the best. Choose carefully, and get references on agents before signing any type of mandate!