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Open mandates open the door to home sale problems

Even if your property for sale has been on the market too long for your liking, you should not be tempted to switch from a sole mandate with one estate agent to an open mandate involving several agents.
 
“This is one of the worst moves an anxious seller can make,” says Martin Schultheiss, CEO of the Harcourts Africa property group, “because it is actually likely to lengthen the listing time of a property rather than shorten it.
 
“Much of the marketing done by the original sole agent will probably go to waste and the newcomers working on an open mandate will have to start from scratch to build up interest in the property. This, of course, will also mean an increase in the seller's holding costs, as well as a real risk of the property becoming overexposed."
 
He says the seller who changes from a sole mandate to an open mandate is also increasing the risk of a "double commission" claim that could severely affect the profitability of his sale. "Such claims can easily arise when the eventual buyer of a property has viewed it with one agent before concluding the sale through another.”
 
Consequently, it is essential that sellers award their mandate in the first place with great care – and avoid choosing an agent solely on the basis of the highest sale price estimate.
 
“Sellers must also take great care to establish the marketing capabilities of the agents vying for their mandate, and should also make it a condition of awarding a mandate that their agent will fully pre-qualify any potential buyer.”
 
Schultheiss says this pre-qualification must extend beyond checking to see whether the prospective buyer will qualify for the requisite home loan.
 
“Prospective buyers must also have sufficient cash to cover all the additional costs of a home purchase, including inspection fees, bond registration, stamp duties and legal fees as well as the transfer duty – otherwise the transfer will be delayed or could even fall through.”
 
 
ISSUED BY HARCOURTS AFRICA


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