Why it is important to choose the correct type of Mandate
Category Area Focus
An agent may not market a property unless he or she has been given a mandate to do so by the Seller. This is clearly indicated by the EAAB's Code of Conduct:
"No estate agent shall:
3.1 offer ... any immovable property for sale or to let or negotiate in connection therewith ... unless he has been given a mandate to do so by the seller or lessor of the property, or his duly authorised agent"
One of the key decisions you are going to have to make when selling your property, is whether to give one agent a sole mandate, 2 or 3 agents a joint mandate, or to give an open mandate to any agent who wants to sell the property. It can be very confusing to know what to decide.
Virtually every agent will give you the same advice; "Give me a sole mandate", which obviously makes sellers a little suspicious about the agent's objectivity and motivation.
So, let's analyse your choices:
1. The logic behind a joint mandate is that you can get the 2 or 3 best agents in your area to all work on your property.
2. The logic behind an open mandate is: Why cut out anybody? Even the smallest agency sometimes finds a buyer.
In both cases you are hoping to get a frenzy of activity around your property as the agents compete for the sale. But let's stop a moment and reconsider - the agents are competing for the sale - because they each know that if another agent sells the property, they will earn nothing. So, securing a sale is all that counts, the price you get for your property is, for the most part, completely irrelevant to the agent.
Now let's consider the logic behind a sole mandate: With a sole mandate you mandate only one agency to market your property. Any reputable estate agency that takes a sole mandate will allow other agencies to bring buyers into their mandate, so you don't have to lose a single potential buyer, but no matter where the buyer comes from, the listing agency will get at least 50% of the brokerage fee.
Why is that important?
Because the mandated agency is certain that they will earn something on the transaction, they will be more inclined to use their bespoke expensive and successful marketing techniques, such as digital marketing with paid ads, lead generation ads etc. All of which increases the possibility of securing more potential buyers and therefore the best price for your property. Coupled with that is the fact that the fees are calculated as a percentage of the purchase price they achieve for you, ensuring the agent is focused on getting you the best price for your property without having to worry about the sale being snatched away from him or her.
So now, instead of agents competing for a sale, buyers are competing for your property, a much better arrangement for you!
To sum up: if just securing a sale at all costs, irrespective of the selling price, is your priority, a joint or open mandate may well have merit. If, however, you want to get the best possible price for your property, then the advice most agents give you, namely "give me a sole mandate", is, surprisingly enough, at least half right.
What I would therefore advise you to do is to give the very best agent in your area a Sole Mandate, not on the price they promise to get you but on the marketing they offer to generate leads for potential buyers. Coupled with that is determining the selling price which forms the foundation of all successful sales and one of the most valuable services offered by an estate agent.
[Read more about choosing the best agent and correctly pricing your property in our previous article.]
Now you will be able to sit back and watch a consummate professional in action! Good luck with the marketing of your property. It's simple and can be enjoyable - as long as you do it right!
The Seeff Hermanus Team, and I, am at your disposal to advise and assist even if you choose not to appoint us.
Author: Seeff Hermanus
