The one and only
If you are planning to sell your house, would it be better to award one estate agent a sole mandate or is it best if many agents were trying to close the sale? Two industry heavyweights voice their opinion:
The advice of Martin Schultheiss, CEO of the Homenet estate agency group:
If you want your home to sell as quickly as possible, award a sole mandate to an experienced agent and stick to it.
Thats the advice of Martin Schultheiss, CEO of the Homenet estate agency group, who says homeowners anxious to get their properties sold are often tempted to switch from a sole mandate, with one agent handling the marketing, to an open mandate with several agents theoretically working on the property.
But our experience shows that such a switch is actually likely to lengthen the listing time of a property rather than shorten it. For one thing, much of the marketing done by the original sole agent will go to waste as the newcomers each institute their own plans to build up interest in the property.
And secondly, agents are quite naturally less inclined to work on an open mandate than a sole mandate, so the property may actually get less attention than if only one agent was involved.
"Such delays will of course mean an increase in the seller's holding costs, as well as a real risk of the property becoming overexposed."
In addition, he says, a cluster of different for-sale boards on a property creates a bad impression and may well encourage prospective buyers to shop around among the various agents involved until they find the one that agrees to present the lowest offer.
The seller might refuse this but if several buyers use the same tactic, he will increasingly come to believe that these low offers are the best hes going to get and end up settling for a much lower price than if hed stuck to one agent.
To make matters worse, notes Schultheiss, the seller who skips from a sole mandate to an open mandate also substantially increases the risk of a claim for double commission that could badly dent the profitability of his sale.
Such claims can easily arise when the eventual buyer of a property views it with one agent but concludes the purchase through another.
The advice of Mike Bester, CEO of Realty 1 International Property Group:
Sellers who shrink from signing sole mandates are effectively distancing themselves from the protection of the law.
Thats the warning from Mike Bester, CEO of Realty 1 International Property Group, who says they are also throwing away control of the selling process.
Bester says many sellers regard a sole mandate as a death sentence, whether due to misinformation in the market place or as a result of bad experiences with unprofessional agents in the past.
Yet, he pointed out, a sole mandate in the hands of a professional provided a set of controls to sellers that was backed by the Estate Agency Affairs Board (EAAB) Code of Conduct.
This Code stipulates under point 3.10.2 that an estate agent who takes a sole mandate has to provide a written marketing plan to the seller, he said. As a result, sellers are protected by the law and can accordingly cancel their sole mandate in the event that the agent fails to perform in terms of the marketing plan. A sole mandate also protects sellers from double commission claims that could arise when more than one entity is involved in the selling process.
Bester said further that in the current real estate environment, where market activity in most parts of the country had been suppressed by a series of interest rate increases, sellers wanted more information and control over their situations than ever before. Driven by the fear of being locked into a contract that would undermine their chances of selling, Bester said the tendency was often to offer the property to a number of different agents. The feeling is that 10 agents are likely to get the property sold more quickly than one, he explained. Yet, the truth is that one good mandated agent will do the same work as 10 people in a partnership that safeguards the interests of both parties and ensures that the seller receives regular updates.
Working with an experienced agent on a sole mandate basis not only allowed sellers to work out an achievable price for their properties but also ensured that they were party to the marketing plan at its inception. The marketing plan, according to Bester, should include when, how regularly and in which publications the property would be advertised and how often the agent intended doing show houses. Advertising needs to be targeted at specific markets for it to be effective and get the best return on time, effort and money spent, he said. He added that successful agencies tended to shy away from open mandates, preferring to spend their advertising budgets and time on their sole mandate clients.
Far from chasing buyers away, Bester said sole mandates ensured that they negotiated with the same agent, which created a platform for competition.
Insofar as the legal requirements of a sole mandate, Bester said it had to stipulate both a starting and ending date as well as a specific price. It also had to be signed by the registered owner of the property who agreed to the price and terms of the agreement. On the grounds of the written sales agreement, the agent is then legally bound to deliver good service and give honest and regular feedback. The danger is therefore not in granting a sole mandate to an agent but in not doing so, he concluded.
Artcile by: Nick Wilson - www.businessday.co.za