Giving permission for commission

Private Property South Africa
Lea Jacobs

When sellers sign a mandate for an estate agent to list their home they aren't simply agreeing to allow an agent to sell the property: they are signing a legally-binding document that will, among other things, record the amount of commission to be paid once the deal is done.

The time to negotiate the commission that will be payable is before the mandate is signed and not once the agent has found a willing buyer who has put in an offer, or, even worse, once both parties have signed the sales agreement.

Catch 22

Agents are always going to be in a bit of a catch 22 situation as far as selling a property goes. They are criticised if the property sells too quickly (in the seller's mind the house sold itself and the agent did little or nothing to facilitate the sale) and criticised if the home stays on the market for months. To be fair, the amount of commission payable generally translates into a lot of money and handing over a large slice of the profit made from the sale can hurt, particularly if the home has sold in record time. One of the most common complaints about agents is how they justify their commission when, given that the property sold within a few days or weeks, they barely worked on selling the property, only advertised the home once or twice, and didn't even put the home on show.

The truth of the matter is: good agents work with serious buyers. They have listened to what that particular buyer is looking for in a home and actively search for a property that fits the criteria. In other words, the buyers that this type of agent brings around, have not only been pre-qualified and as such are in a position to buy the home, they are generally going to like what they see.

Speedy sales aren’t “lucky”

The fact that a home has been sold quickly in no way indicates that the agent was “lucky” and has undervalued a home in order to make a quick sale. It means that the agent has done his homework, fully understands the buyer’s needs and has used his skill to secure a sale.

The belief that agents purposely value a home at a lower price in order to sell a home doesn't make sense. Everyone would lose if this were the case because commission is charged as a percentage of the selling price - the lower the price, the lower the commission. The argument that an agent should lower his commission if the seller accepts a lower offer, doesn't hold much water either, because, for the reasons stated above, the commission is already lower than it would have been if the property had sold for the original selling price.

Regardless of the timeframe concerned, if an agent sells a home, he has done his job and the agreed commission is due. Ascertaining and agreeing to that commission in advance is the key to all parties remaining happy with their end of the bargain.

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