select
|

What you need to know about open mandates

It makes sense that the higher number of estate agents trying to sell the property, the better - right? Some might be inclined to think so, but this is not necessarily the case. In fact, in most instances an open mandate can delay the home sale and create problems, says Kevin Abbott, Sales Associate at RE/MAX Premier.

So what is an open mandate and why are they potentially problematic for sellers? “Sellers have three options when it comes to mandating agreements – an open mandate, dual mandate or a sole mandate. If a seller opts for the open mandate route, they are taking the exclusivity out of the deal - giving the home to multiple agents to sell, often from a variety of agencies. While this means that several are tapping into their networks to find the right buyer for the home, things can get complicated, and there is the danger of the seller having to pay a possible double commission,” advises Abbott.

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, 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 can be misinterpreted, which could cause conflict.  A clear, written contract protects both the seller and agent, reducing the risk of any misunderstandings.

Abbot adds that another problem with an open mandate is that when buyers drive up to a home with several sign boards outside, it screams desperation – this isn’t the message that sellers want to convey. “Nothing scares away prospective buyers quite like desperation,” says Abbott. “Immediately, potential buyers start to question why it takes so many agents to sell the home, thinking there could be some underlying issues that are not aware of.”

He says that in an open mandate scenario agents will bring the seller the first offer they receive, which might not be the best offer - this is because they want to get the offer to the seller before another agent does.  “The thing is that when selling your home, you want the buyers to be competing and not the agents. The agents are not the ones who are going to buy the property – the buyers are.”

What sellers don’t realise is that agents will spend 80% of their time on their sole mandates and the remaining 20% of open mandates. Why is this? Abbott says that the reason is because agents don’t want to spend time, money and effort marketing a home, only to lose the deal to another agent. “Agents work on a commission basis, so if they don’t sell, they don’t make money.  An open mandate is risky for an agent, as it could cost them money and result in no reward - it makes more sense for agents to use their resources on their sole mandates. Why spend countless hours hosting show days, bringing buyers to view the property, researching, advising the seller on how best to sell the property, only for another agent to join the party and reap the benefits,” says Abbott.

In closing, Abbott advises sellers rather sign a sole mandate and deal with one agent instead of several. “Selecting a trusted real estate professional and signing a sole mandate will give you the optimum chance of selling your home for the best price in the shortest time.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 15 Dec 2017
      With much still riding on the outcome of the ANC elective conference later this month (16-20 December 2017) which, coupled with the Budget Speech in February next year (2018), will impact on business and consumer confidence and market sentiment in general, it is expected that South Africa’s residential property market will continue to maintain its resilience, reflecting an ongoing healthy appetite for property investment – particularly in major metros and key hubs.
    • 15 Dec 2017
      The City of Cape Town has approved a drought levy and increased water restrictions to level 6.
    • 15 Dec 2017
      Negativity seems to have become the fashion in SA’s real estate industry over the past few months, but while there will be challenges, the property market is not going to “fall off a cliff” in 2018, says Berry Everitt, CEO of the Chas Everitt International property group.
    • 06 Dec 2017
      Homes situated within residential estates have become a more and more popular option across South Africa. There are, however, some emergency situations when heavily guarded access points to these communities can be more of a hindrance than a help.
    • 06 Dec 2017
      The average year-on-year house price growth for this year was likely to be slower than last year, despite year-on-year house price growth accelerating mildly in recent months.
    • 05 Dec 2017
      Located in dynamic and scenic Kenilworth is The Wentworth, a new development exclusively marketed by Greeff Properties.
    • 05 Dec 2017
      Today's rental market is a competitive place, so when you find the perfect spot it can be tempting to just sign on the dotted line and hope for the best. Sadly, there are more and more scammers who are taking advantage of this opportunity to dupe unsuspecting applicants out of their hard-earned cash.
    • 05 Dec 2017
      Gated communities are increasingly popular with home buyers due to the perceived safety these neighbourhoods offer. “These gated communities are popping up all over the country and while they certainly can boost security, a few issues have been cropping up – specifically referring to road usage,” says Bruce Swain, CEO of Leapfrog Property Group.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK