The term 'Sole Mandate' gets thrown around a lot. We've all heard it at one point or another but what exactly is it? What does it involve? Are there dangers in a Sole Mandate? Does a Sole Mandate involve selling my soul with my property? Keep reading and I'll take you through everything you need to know about a Sole Mandate!
What is a Sole Mandate?
You get Open Mandates and Sole Mandates. An Open Mandate means any estate agent can sell your property and that it's pretty much fair game for anyone. A Sole Mandate on the other hand is the term attached to giving an estate agent 'Exclusive Rights' for selling your property, that means only your chosen estate agent can market and work with your property. What good is that you ask? Well there is a gigantic pitfall when not dealing with just one estate agent.
That being that when you use more than one estate agent you might be liable to pay all the estate agents their percentage of commission when your house does sell! Think of a Sole Mandate as an insurance policy against something like that happening to you. A Sole Mandate is a lot like a very exclusive product that only one person can sell, this one person being your chosen estate agent. Your chosen estate agent being the only one who has this exclusive product means it's unique and rare, only on offer as his product! This almost always guarantees your estate agent works even harder to market your product and sell it at a much higher price than what it would have sold for at multiple estate agents.
What else does a Sole Mandate do for me?
As mentioned above it's a known fact that houses placed on the market on a Sole Mandate basis generally sell at much higher prices than those houses being marketed under an Open Mandate basis. Aside from that absolutely delightful fact there's also the fact that one estate agent means you won't constantly be bothered by one of the 50 estate agents you would have had if you had an Open Mandate!
Remember using more than one estate agent does not mean your property will sell at a high price or even reach more buyers. Most estate agents operate within the same buyer pool. That's correct, a buyer will often see the same property twice or even 3 or 4 times by going to different estate agents.
The real problem with Open Mandates is that when dealing with many estate agents they begin competing and undercutting each other. This can be a real problem for you as a seller and can ultimately mean your property might be on the market for years and sell at a much lower price than you were hoping for. Buyer's don't like seeing a property on the market for R900 000 and then going to another estate agent the next day and seeing the same property for R700 000!
Setting up a Sole Mandate
Before you get excited and run out to the nearest estate agent to set up a Sole Mandate, there are a few things you should know!
There's no such thing as a stupid question, only stupid people! When interested in setting up a Sole Mandate with an estate agent make sure to ask about the agents track record, the percentage of mandates they are selling, a list of at very least 3 successful sellers he worked with and how long it takes him to sell a property on average. You don't want someone who promises you the moon and the stars but takes the next 5 years to deliver them.
Sole Mandate = Commitment = Not a guarantee
Your Sole Mandate does not guarantee your house will sell quicker or even sell at all. The idea behind a Sole Mandate is that it's a commitment from your estate agent to spare no expense to market and sell your property. It also serves as an insurance policy for you that you won't have agents undercutting each other and that you won't have agents calling you to show people your property at all hours of the day. The benefit of having one hard working estate agent as opposed to 10 estate agents who don't really care about selling your property is clear.
The standard Sole Mandate period is 3-6 months. If your estate agent fails to sell your property within the time period set forth it is possible to lengthen the period to 12 months or more. Usually this is the case for expensive properties where buyers are rare. If you have a relatively entry level property that isn't too expensive you should opt in for the 3 to 6 month period!
You can switch agents at the end of the time period. If you are unhappy with the performance of your estate agent during the time period you set forth for the Sole Mandate you can switch estate agents and set up a new Sole Mandate with another agent. Just make sure to get your original estate agent to give the new estate agent a list of buyers he already marketed the property to. This helps your new estate agent see who shot down the property so he doesn't waste his time trying to market it to those buyers!
What should be in a Sole Mandate?
At very least the following things should be specified very clearly in your Sole Mandate agreement:
- The price of the property
- The rate of brokerage
- The terms of the mandate with regard to exclusive marketing and selling rights
- The obligations of the agents in regard to marketing, advertising and providing other services available
- The obligation of the seller during and after the expiry of the sole mandate with regard to buyers introduced during the currency of the mandate
The Sole Mandate & Acquaintance Buyers
So you just set up your first Sole Mandate, you feel confident that your estate agent is capable and that your property will sell at the price you want within the next few weeks. Enters Piet from down the street, your friend and neighbor. Now he wants to buy your property privately because he's always liked the braai and garden. Uh oh! What now? You just signed a Sole Mandate and want to cut Piet a bit of a deal on your property!
The first mistake people make when a buyer approaches them directly is to panic and make promises they can't keep. Don't make any promises price wise regarding cutting a deal and don't talk too much about the property, you might ruin the marketing pitch! Take your interested buyer straight to your estate agent and explain the situation. Your estate agent will work something out where everyone benefits, including your friend Piet!
It has often happened that sellers make promises price wise that are against the terms and conditions of the Sole Mandate with the estate agent, this leads to trouble and ultimately ruined friendships. Always keep your estate agent informed of all private or acquaintance buyers that approach you.
Ultimately it depends on your personal preferences and circumstances but if you are like most sellers you want to sell your property as quickly as possible and at the highest price possible. The Sole Mandate is the best way to do this. Always remember that submitting your property to multiple estate agents is risky business and that it's always safer to deal with just one estate agent that can apply themselves fully and devotedly to the marketing and selling of your property.