Why do people still think open mandates are the way to go when selling a property? Aren’t you looking to get the highest price possible? When selling your home, you want BUYERS to compete against one another.
However, with an open mandate, it will be the AGENTS trying to outdo one another. Not with the best offer, but they’ll present ANY offer they can get their hands on. After all, if that one agent doesn’t do it, the buyer might submit via the other agent.
Does An Open Mandate Delay a Home Sale?
While some might be inclined to think that the more estate agents trying to sell a property, the better, this is not necessarily the case.
In fact, in most instances an open mandate can delay the home sale and create problems, says Kevin Abbott, sales associate at RE/MAX Premier.
So what is an open mandate and why are they potentially problematic for sellers?
“Sellers have three options when it comes to mandating agreements – an open mandate, dual mandate or a sole mandate. If a seller opts for the open mandate route, they are taking the exclusivity out of the deal – giving the home to multiple agents to sell, often from a variety of agencies. While this means that several are tapping into their networks to find the right buyer for the home, things can get complicated, and there is the danger of the seller having to pay a possible double commission,” advises Abbott.
According to Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, 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 can be misinterpreted, which could cause conflict.
A clear, written contract protects both the seller and agent, reducing the risk of any misunderstandings.
Abbot adds that another problem with an open mandate is that when buyers drive up to a home with several sign boards outside, it screams desperation – this isn’t the message that sellers want to convey.
“Nothing scares away prospective buyers quite like desperation,” says Abbott.
“Immediately, potential buyers start to question why it takes so many agents to sell the home, thinking there could be some underlying issues that are not aware of.”
Open mandate risky for an agent
He says that in an open mandate scenario agents will bring the seller the first offer they receive, which might not be the best offer – this is because they want to get the offer to the seller before another agent does.
“The thing is that when selling your home, you want the buyers to be competing and not the agents. The agents are not the ones who are going to buy the property – the buyers are.”
What sellers don’t realise is that agents will spend 80% of their time on their sole mandates and the remaining 20% on open mandates.
Why is this?
Abbott says that the reason is that agents don’t want to spend time, money and effort marketing a home, only to lose the deal to another agent.
“Agents work on a commission basis, so if they don’t sell, they don’t make money. An open mandate is risky for an agent, as it could cost them money and result in no reward – it makes more sense for agents to use their resources on their sole mandates. Why spend countless hours hosting show days, bringing buyers to view the property, researching, advising the seller on how best to sell the property, only for another agent to join the party and reap the benefits,” says Abbott.
In closing, Abbott advises sellers to rather sign a sole mandate and deal with one agent instead of several.
“Selecting a trusted real estate professional and signing a sole mandate will give you the optimum chance of selling your home for the best price in the shortest time.”
Issued by RE/MAX Southern Africa – http://www.remax.co.za