Mandates 101: Here’s what you should know
There’s more than one way to skin a cat. There is also more than one way to lease or sell a property. Working with a reliable realtor is usually the best option. They know the law and are familiar with all the hoops that need to be jumped through and documents that need to be verified and signed. Even with a realtor, though, there is more than one way that the realtor can be mandated to conduct business. Carefully consider the different mandates with their pros and cons, and then decide which will work the best for you and your property when you want to lease or sell.
As the name indicates, the open mandate is open to all agencies. You will have several agencies listing your property and attempting to sell it. You won’t be committed to a single contract with a single realtor for a set period. Whichever agency gets a buyer first will also get the commission. Technically, you don’t have to sign an open mandate with any agency; it is still recommended to do so as this will sort out a commission percentage before any sale.
In a nutshell, the pros of an open mandate:
- You aren’t locked into a contract so there is a lot of flexibility during the selling process.
- Because more than one agency is advertising your property, there is a lot more exposure. This can become a con, though, as we will soon discover.
The cons of an open mandate:
- Too much exposure can make a property owner seem desperate to get rid of the property and may propagate the idea that there is something wrong with it.
- Similarly, having many “For Sale” signs on your sidewalk won’t necessarily present the best image of the property to be sold.
- If it is not 100% clear which agency is responsible for the sale, for example when the buyer communicated with more than one, the seller might end up having to pay double commission.
- The agency dedication might be lacking. If a couple of agencies are advertising your property, they might not spend as much time and effort on finding you the best buyer. They know that another agency might find a buyer before them and focusing on their sole mandates would be more profitable.
- You will need to organise viewings and access to your property with multiple agencies on multiple days.
With a sole mandate, you contract the selling of your property to one agency for a set period. During the contracted time, that agency is the only party that will be advertising your home, and regardless of who finds the buyer, that agency will receive the commission. Your contracted agency might informally work with other trusted agencies, but that is none of your concern; you will only communicate with the one.
Pros of a sole mandate:
- Easy communication with just one agency and organising viewings and property access with just one agency.
- A more dedicated selling process. There is no risk of another agency receiving the commission, and the sole mandated agency will put more effort into getting the best buyer for your property.
- No competition between agencies also means there probably won’t be any pressure placed upon you to accept a lower offer.
- You only pay one fixed commission, guaranteed.
Cons of a sole mandate:
- You have to cross your i’s and dot your t’s. In other words, you have to make very sure that you mandate a reliable agency that will have your best interests at heart when they advertise and sell your property.
- If you want to work with a different agency, you have to let the sole mandate contract run its course.
- If you find a buyer yourself you will probably still have to pay the agency their commission.
Another option available to home sellers is an MLS in which a single agency (the listing agency) is still contracted to sell your property, but they list it on a central service open to other agencies. Other agencies have the details of the property on sale and can find a buyer. If another agency finds the ultimate buyer, the commission is shared between the listing agency and the agency that found the buyer.
Pros of an MLS
- You pay one, agreed-upon commission, whether this commission needs to be shared or not.
- It increases the properties exposure.
- It levels the playing field to where large and small agencies can find a buyer for your home.
Cons of an MLS
- As with the open mandate, an agency might not put as much effort into finding the perfect buyer if they know they will need to share the commission.
- You might have to deal with multiple requests for viewings from different agencies.
At the end of the day, no two homes and no two sales are the same. You have to choose the mandate that will work best for you and the time frame in which you hope to get your property sold. Whichever mandate you choose, though, always ensure that the realtor you work with is honest, reliable, and trustworthy. At Karis Properties, we do our utmost best to find the perfect buyer regardless of the mandate.