Sole Mandate vs Open Mandate
Under normal conditions, open mandates would appear to be the preferable option. Isn’t it true that more competition and visibility means better service and a larger pool of buyers? Unfortunately, the contrary is more often true in the case of real estate sales.
Competition has its own incentives, which may or may not be aligned with your own.
Because of the competition among agents, a speedy sale is more likely to occur than a good price. Nobody wants to waste time negotiating when another agent could beat them to the finish line at any point. As a result, it is safer for an open mandate agent to push through a lower offer and be certain of a commission than to wait for a higher offer and risk losing out entirely.
The requirement for a sole mandate when putting a property on the market is an important one that deserves to be addressed.
One of the main reasons for signing an exclusive mandate with an agency is to
- Avoid potential buyer duplication
- Avoid the risk of duplicate commission claims and
- Avoid a low ball offer due to greediness
When more than one agency is attempting to sell a property, it can get unnecessarily complicated. Which often frustrates potential buyers and slows down the selling process.
A sole mandate, sometimes known as an exclusive mandate, is an arrangement in which the seller grants one agency the exclusive right to market and sell a property.
The agreement must include the following:
- It must be in writing
- Should include the duration of the mandate
- The property’s selling price
- The agreed-upon commission structure
- Any additional terms and conditions related to the property’s sale
- And all other pertinent information
When a property is only advertised by one agency, the risk of buyer duplication is greatly reduced, and the property does not become stale. Having multiple agents on the property can lead to conflicts and disputes concerning the property’s pricing, which can have far-reaching ramifications in and of itself.
If you make use of a sole mandate, you won’t have several agencies sending potential buyers to inspect the property, so there would be significantly less hassle and administration for you as the seller.
At the end of the day, the seller’s and agent’s goal is to sell the property as quickly as possible and for the greatest possible price, to a buyer who can follow through on the terms of the contract.
Remember, the company you grant sole mandate to will be better compensated for their efforts if they achieve a higher price, an incentive that aligns their goals with those of the average seller, which means they won’t hesitate to invest more time and money into the marketing and negotiations of your property.