Many sellers shy away from signing a sole mandate as they are worried that putting all their eggs into one basket may reduce their odds of finding a buyer for their home in the shortest time possible.
He explains that essentially, a mandate is an instruction or authority from a seller to one exclusive estate agent to provide the services involved in selling a specific property. “It’s a business contract,” says Goslett, “an agreement between the seller and their estate agent, allowing the agent to market the seller’s home in order to procure the right buyer for the property. Additionally the seller is also agreeing to allow the agent to handle all the legalities involved in a property sales transaction.”
Goslett says that sellers have the option of an open mandate, which means that a number of agents may be working to find a suitable buyer for the property. This does not restrict the seller to using one specific real estate company; however it can leave the seller open to a possible double commission claim. “Given the fact that an open mandate does not need to be put into writing, there could be some areas within the agreement that could be vague or misinterpreted. There could also be the question of which agent was actually responsible for the effective cause of the sale. While one agent may have signed the papers with the buyer, it could have been the other agent’s advertising and marketing that initially brought the buyer to the property in the first instance. Having a written contract in place will protect the seller and ensure that an agent puts maximum effort into goals that have been set. Very often an open mandate will restrict the amount of time and money an estate agent will spend on marketing the property, which will reduce the home’s exposure,” says Goslett.
A sole mandate is a legally binding document that must be reduced to writing. Goslett says that it gives a specific agent the exclusive right to sell a property for an allotted time period. This means that the seller may appoint another agent after the time period has elapsed and the home has not been sold or they are unhappy with the agent. However, within the time frame given in the sole mandate, the homeowner may not appoint another estate agent. The only other person that is entitled to sell the property is the owner themselves, provided that this has been confirmed in writing with the estate agency that has been awarded the sold mandate. In the case where the homeowner does sell the property themselves, there may still be a fee payable to the agent.
There is another option for sellers in which they give the agent an exclusive sole mandate, which is essentially the same as a sole mandate but is slightly more restrictive in that only the estate agent can market and sell the property and the homeowner is not permitted to sell the property. In the case of an exclusive sold mandate, the seller may authorise the agent to accept or reject the offer on their behalf.
“It is important for seller to know that the agent they are signing the mandate with is the right agent for them, so the agent must provide the seller with a marketing plan for their property. If at any time the agent is not following the marketing plan they have provided, the seller will have the right to cancel the mandate. It is imperative that the agent works according to what is within the seller’s best interest at all times, giving sound professional advice and assisting the seller to make the right decisions, especially when more than one offer has been presented,” says Goslett.
The concept of a sole mandate is based on creating efficiencies and maximising the benefits for all the parties involved in the transaction, which is why most financial institutions and estate agencies will recommend that the seller has one in place. “There are number of benefits created through a sole mandate which will ensure more effective marketing of the property and an orderly conclusion of the sale. A sole agent would be aware of any disclosures, which can be very difficult in the case of an open mandate,” says Goslett.
He adds that from a security aspect it is also far better if only one agent has access to the property. Other benefits include that fact that a sole mandate streamlines and simplifies the sales process for the seller, as they will only be dealing with a single agent, making the marketing strategy of the property more manageable. “Having one contact person who is dealing with the sale will eliminate the logistical issue of managing a number of different estate agents. Any time anything changes a number of people must be informed, instead of just one. Much of the seller’s time will be spent coordinating showing times between the numerous agents to ensure that there are no double bookings,” says Goslett.
Signing a sole mandate is not about the seller putting all their eggs into one basket, but rather about allowing a reputable, experienced estate agent the opportunity to make the process simpler. It will ensure that an entire team within a real estate network is cooperating to sell the property quickly and at the best possible price.
“Each seller will have their own unique set of requirements and should choose the mandate option that they are most comfortable with and the one that best suits their needs. While the choice of mandate could affect the process and the seller’s sales experience, it is the agent’s duty to get the best possible price and terms for the seller,” Goslett concludes.