Apart from being a rather controversial topic, estate agency mandates are often poorly understood. In general, estate agents can’t say enough good things about a sole mandate as well as how much time, effort and energy they will put into marketing if you to grant them exclusive rights to selling their property. On the contrary, I have found that many people who have signed sole mandates in the past do not share this opinion and will insist on opting instead for an open mandate, allowing number of agents to sell their property.
There are three different types of mandates, which are described below:
- Sole Mandate
A sole mandate gives exclusive rights to a single estate agent to market your property. On the sale of the property the agent is paid the full commission whether the agent introduced the buyer to the property or not. Sole mandates are generally valid for a period of 3-6 months. If the property hasn’t sold in that time the mandate will then be terminated or renegotiated.
Estate agents often explain that they will put in more effort and dedicate more resources to selling a property for which a sole mandate is signed. There is certainly a clear incentive to do so as there is always a chance that their efforts in selling a property on an open mandate will go unrewarded if another agent ends up making the sale.
The downside of a sole mandate is that as a seller, you are locked-in to a contract for a set period with one specific agency. If you do sign a sole mandate, I would recommend that you agree to a mandate duration of no more than 2 months.
- Open Mandate
An open mandate allows you as the seller to market your property with any number of real estate agents. In this instance the estate agent that finds the buyer and sells the property will receive the agreed upon commission. The other estate agents will not receive any payment.
The advantage of using an open mandate is that you can sell your property through whichever estate agent you choose and are not locked into a restrictive contract.
It is common for estate agents to offer sellers a lower commission rate for a sole mandate rather than an open mandate. This is because estate agents are willing to take a cut in commission as a trade-off for the sole rights to sell the property.
If an estate agent says to you, “I will charge a commission of 5% with a sole mandate or alternatively, I will charge a commission of 8% with an open mandate”, what would you choose? This is a common method used to entice sellers to sign a sole mandate.
- Multi-listing Mandate
A multi-listing mandate is signed where an estate agent sources a property and gives permission to other estate agents to sell the property. The estate agent who sources the property is known as the “listing agent”. When you sign the multi-listing mandate with the “listing agent”, your property details are sent to the other member agencies in the multi-listing group. These estate agencies then choose whether they want to try sell the property. If they are successful, the commission is split between the “listing agent” and “referral agent” who found the buyer.
A multi-listing mandate is a hybrid of the open and sole mandate. In this scenario as with an open mandate open mandate there could be any number of estate agents trying to sell your property, but this option often comes with a higher commission rate and internal politics.
- Our Viewpoint
At Proptions we believe we don’t have any place in telling you who you can or can’t work with to get your property sold. It is your priority to get your home sold – It is our priority to offer you the easiest and most affordable way to do it!