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Benefits of a Sole Mandate
By arlene | March 22, 2008
Many estate agents find it very difficult to sell the benefits of a sole selling mandate. On analysis it appears that the main reason for this is that the agent is not ready to accept responsibility for non-performance. If any agents do not believe in the benefits of a sole mandate, how are they expected to convince sellers to become believers? More importantly, a sole mandate is not a guarantee of sale, but it should rather be a guarantee of commitment and performance by that agent. It should be sold as a reciprocal loyal commitment to market the property at its highest and best price. Agents also need to understand the nature of the contract which they would ask a seller to sign.
The sole mandate is a legally binding contract entered into by the seller and the real estate agent. It gives the agent the legal right to be the only marketer of the property over a certain period of time and at a price agreed to by the seller and the agent. It is essential that the standard form used by an estate agent is correctly drawn by an attorney so that the interest of the seller and the agent is protected.
If agents are sincere in their determination to sell a property, then there are many obvious benefits which accrue to sellers willing to sign a sole selling mandate.
1. Marketing control
It is essential for the agent to exercise strong control over the property. This will enable the agent to determine to whom it is shown and when it is shown, and how it is to be sold. Anyone interested in the property must see the representing agent and conduct any negotiations through that agent.
2. Planning time and space
Because only one agent is representing the property, the mandate period can be successfully used to develop and implement amarketing plan. There is no worry of anyone interfering with the marketing or advertising or showing the property before the property is ready to be launched onto the market. It ensures that the seller prepares the property to look its best before showing starts.
Therefore an agent will be able to design a marketing programme for each property and control the marketing activity. Put up signs, create advertisements, develop and use brochures, schedule show- days and use any other promotion in the plan. The seller can expect consistent advertising for their home and will get the most generous exposure in the best publications. This should bring in the best offers and most buyers currently in the market.
3. Focused attention
As a general rule, agents concentrate their attention on well- priced saleable properties under their control. A sole mandate on a property justifies the time, effort and advertising costs generated by marketing. Then there is the added responsibility accepted by the agent to ensure that everything possible is done to get the property sold. The seller has made the commitment to the agent, which is reciprocated.
4. Seller benefits
There are many good reasons for the seller to sign a sole mandate. We know that sellers want the most money for their property with the least amount of problems. By dealing with one agent this can be achieved. It is a fallacy that many agents will do a better job than one agent can. All buyers interested in the seller’s property are funnelled through to one agent who can negotiate with each one and thus obtain the best price. Conversely, when the property is given to three agents with different buyers, each agent is working in isolation. Their interest becomes getting their buyer’s offer accepted first—at any price! The agent is then working for the buyer because if his/her buyer doesn’t buy, the agent does not get paid. Pressure is exerted on the seller to accept the offer being presented, because if that buyer does not get the property another agent’s buyer will.
Buyers perceive the property being offered through one company and not eight or ten as more exclusive. They will feel more secure in knowing that one person is controlling all interested buyers.
5. Avoid double commission
Often a property is shown to a husband and wife through two different agents. When a sale is made both may claim commission. The commission isn’t split between the two representing agents, each is entitled to their own commission in full. This cannot happen if the property is marketed by one agency with sole selling rights.
6. Price Protection
A seller’s price is protected when a single agency is in control. Example: Agent Annie takes Mrs Jones to see the house in the morning. Mrs Jones likes the house and she wants to buy it. Just to make sure that she is not making a hasty decision, Mrs Jones goes out with Joe Soap in the afternoon. Joe takes Mrs Jones to several homes, including the one she saw in the morning. Mrs Jones mentions that she saw the house with Agent Annie and that she likes the house and is thinking of making an offer. To keep Mrs Jones from doing so Joe tells her he will be able to get the owners to accept an offer of R10 000 lower. The seller loses out to the tune of R10 000 if Joe Soap’s offer is accepted, and worse, a problem may have been created for the seller if Agent Annie can make a case as being the “effective cause” of the sale, and is also entitled to claim full commission!
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Topics: Agent, Company, Contract, Form, Job, Market, Property, Sale |
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