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14 Nov 2011PROPERTY: Sole Mandates Protect Sellers in Today’s Volatile Market
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“This means that buyers may have been introduced to the property by one agency, and then reintroduced by a second agency following a price adjustment. This leaves the seller vulnerable to a double commission claim, and raises questions as to which agency was in fact the effective cause of sale.
“This is exactly why it is imperative for sellers to commit to written mandates that offer both themselves and the respective agencies a level of comfort and protection. Sole mandates will clearly stipulate that any purchaser introduced to the property during the mandate period is deemed to have been introduced by the mandated agency, and if this purchaser then commits to an offer at a later stage, he is obliged to work with the original company. The best way for a seller to protect him- or herself is to request a list of buyers from the estate agency upon expiry of the mandate. The seller can then exclude these buyers from any subsequent mandate which he elects to sign with another company. Everything is then in writing and approved by all parties, and the seller can rest assured that he will not implicate himself in a double claim,” says Reynolds.
Estate Agencies Look to Sole Mandates as a High Priority
She says that buyers will tend to shop around and invariably work with many different companies, so the onus is on the estate agencies to deliver a professional service and ensure that as soon as their mandate expires, they present the seller with a list of buyers who need to be excluded from any subsequent mandates. In addition, sellers should be mindful of the fact that buyers are non-exclusive, so most agencies will be working with the same buyer pool, and hence opting for an open mandate will not open up the buyer pool. “Indeed,” says Reynolds, “open mandates are generally a low priority for agents, so the level of marketing and expertise that is invested in open stock is far lower than would be the case with a sole or joint sole mandate.
“Essentially, the risks of an open mandate are that no agency will take responsibility for the piece of stock and very little advertising and marketing will be undertaken by any of the agencies. Furthermore, the same buyer might view the property on several occasions with different agencies, exposing the seller to double commission claims. Thirdly, open mandates result in over-exposure of the stock, sending signals to the buyer pool that the stock is not exclusive and hence ‘cheekier‘ offers will come in.”
Sole Mandates Allow for Full Range of Services to Sellers
She says with a sole mandate, however, agents are able to offer the full range of services to their sellers, and to protect them from unqualified buyers. In addition, the mandated agency will have the expertise to create buyer competition so as to achieve better pricing for the seller. “The key is to establish a credible relationship with your agent, so that there is a level of trust on both sides which facilitates a smoother sale process. It is also important to bear in mind that the market is still sluggish, so a sale won’t happen overnight, but at least if sellers has committed to sole mandates with a professional agency with a strong national footprint, then he/she will receive a high level of service from a trusted brand and the agent will ensure that the seller’s interests are protected at all times,” adds Reynolds
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