IS SIGNING A SOLE MANDATE THE RIGHT CHOICE?
Is it better to work with one estate agent or work with many? Many homeowners feel that if they sign a sole mandate with an agent, they are reducing their chances of finding a buyer in the most optimum time frame and for the highest price. However, while homeowners may think they are limiting their chances by signing a sole mandate, the truth is that it will be far more beneficial to them than they think.
Signing a mandate means that the homeowner is giving the real estate agent an exclusive contract to market and sell a specific property. It is then up to that agent to find the right buyer for the home. The agreement also allows the agent the right to deal with all of the legalities that are involved in the property sales transaction.
Sellers have two options when it comes to mandates – an open mandate or a sole mandate. If a seller opts for an open mandate, they are taking the exclusivity out of the deal. In this scenario, multiple agents, often from a variety of agencies, will be working to secure the sale. As with most options in life, an open mandate has its pros and cons. While there are several agents tapping into their network to find the right buyer for the home, it can bring about complications, and there is always the chance of a possible double commission claim. An open mandate allows for a wider net to be cast, however doing so also opens up the potential for confusion as to which agent was the effective cause of the successful sale. One agent may have signed a sales agreement with a buyer, but it could have been the result of another agent’s advertising and marketing.
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 could be misinterpreted, which could cause conflict. A clear, written contract protects both the seller and agent, reducing the risk of any misunderstandings. A written contract will also ensure that the agent puts maximum effort into fulfilling the goals that have been set. If an agent is working on an open mandate, they may be less inclined to spend as much time and money marketing the property, which will reduce the home’s chances of selling.
Conversely, a sole mandate is a legally-binding document that must be in writing. In the agreement, an agent is given the exclusive right to sell the property for a period. During the allotted time frame, the seller may not appoint another agent to market the property. If the seller is not satisfied with the service, they can appoint another agent once the sole mandate has elapsed. If a homeowner has signed a sole mandate, they will still be entitled to market and sell the property themselves, but only if confirmed in writing with the estate agency that has been awarded the mandate. In an instance where the homeowner does sell their property, they may still be required to pay a fee to the sole mandated agent.
Homeowners can opt to give an agent an exclusive sole mandate, which is the same as a sole mandate but slightly more restrictive in that the homeowner is not allowed to sell the property themselves. An optional term of this mandate is that the seller may authorise the agent to accept or reject an offer on their behalf.
The reason for a sole mandate is to ensure that the transaction is handled in the most efficient way possible and all parties are protected. It is highly beneficial for sellers to have a sole mandate in place, which is why most financial institutions and estate agencies recommend that sellers have one. Having a sole mandate will ensure more effective marketing of the property and an orderly conclusion to the sale.
From a logistical standpoint, a sole mandate makes more sense because the seller only has to liaise and deal with one agent, not several. Dealing with one agent simplifies the process, with far less time spent coordinating the seller’s schedule with the various agents. It is also better from a safety perspective, as only one agent will have access to the property.
Before signing any mandate, sellers must know that they are working with the right agent for their needs. It is imperative to select a qualified agent with a valid Fidelity Fund Certificate (FFC).The agent should also provide the seller with a marketing plan for the property. If at any stage during the process the agent is not following the marketing plan they have provided, the seller will have the right to cancel the mandate. At all times the agent should work according to what is in sellers best interest, giving sound professional advice and assisting them to make the right decisions - especially when multiple offers are presented.
While sellers might be inclined to think that signing a sole mandate is restricting their options, it is an opportunity to make the process more simple.