Lew Geffen has been in the real estate industry since 1972, is recognised as one of the leading experts in property in South Africa and holds many directorships in associated real estate and allied industries.
Private Edition
View some of our most desired properties in our exclusive online magazine: Private Edition
The Pitfalls of an Open Mandate
Author: Lew Geffen Sotheby's International Realty | Published: December 13th, 2011
It’s only natural for those putting their homes on the market to want as swift a sale as possible. For that reason, they are often tempted to opt for an open mandate, assuming that the more agents working on selling their property, the greater the likelihood that it will sell quickly. Unfortunately this is not always the case. Lew Geffen Sotheby’s International Realty takes a look at some of the drawbacks of open mandates, as well as the benefits of a sole mandate.
1. Half-Hearted Marketing Efforts
An open mandate is, essentially, a seller’s oral permission for any estate agent to market their property. There is no contractual obligation on the part of any of these agents to market the home. The result is many agents putting in sub-par effort in their attempts to sell the property.
2. Seller Inconvenience
Having many agents working towards selling your home also means that they are all jockeying to get feet through the property, without sufficient communication and coordination. This results in sellers being constantly harassed and bothered by agents wanting to haphazardly arrange appointments throughout the week.
3. Lack of Control
The lack of a written contractual obligation also means that sellers have minimal control over the manner in which their property is marketed by agents.
In the case of a sole mandate, sellers are able to foster a close relationship with their selected agent, who can direct marketing according to specific client requirements. Sellers also have the power to change marketing decisions they do not approve of. With an open mandate, however, that relationship and control are significantly diluted.
4. Over-Exposure
One of the most important pitfalls of an open mandate that sellers should bear in mind is the risk of over-exposure. As Jason Rohde, CEO of Lew Geffen Sotheby’s International Realty, notes, “When there are numerous ‘for sale’ signs, bearing the names of various estate agents, littering the pavement – and your home has appeared week after week in every estate agency’s advert in the local newspaper – your home could become over-exposed. This is an undesirable position to be in because the common perception will be that there is something wrong with the home and nobody wants to buy it.”
5. Not Getting Fair Value
A final concern of choosing an open mandate is sellers getting less than fair market value for their home. With numerous agents competing for a sale, lazier agents may well chance their luck and take an offer that is far less than fair value, and try to convince the seller otherwise. Underselling in this way is unethical, but unfortunately rather common.
Sole Mandates
Lew Geffen Sotheby’s International Realty strongly recommends that sellers opt for sole mandates. Sole (or exclusive) mandates are legal agreements that contractually bind an estate agency to market and sell a home within a pre-determined time frame. This makes the agency responsible for using their resources to the fullest extent in order to market the home in a targeted and appropriate way. A seller therefore benefits from a strategic marketing campaign and a concerted effort on the part of the agent to find the right buyer for the property.
Before diving into a sole mandate, however, sellers should be wary of the length of the mandate period. As Jason Rohde notes, “A seller should not agree to a sole mandate of longer than 120 days, depending on the circumstances surrounding the house sale.” This way, there is a healthy compromise between focused marketing efforts and seller freedom.
1. Half-Hearted Marketing Efforts
An open mandate is, essentially, a seller’s oral permission for any estate agent to market their property. There is no contractual obligation on the part of any of these agents to market the home. The result is many agents putting in sub-par effort in their attempts to sell the property.
2. Seller Inconvenience
Having many agents working towards selling your home also means that they are all jockeying to get feet through the property, without sufficient communication and coordination. This results in sellers being constantly harassed and bothered by agents wanting to haphazardly arrange appointments throughout the week.
3. Lack of Control
The lack of a written contractual obligation also means that sellers have minimal control over the manner in which their property is marketed by agents.
In the case of a sole mandate, sellers are able to foster a close relationship with their selected agent, who can direct marketing according to specific client requirements. Sellers also have the power to change marketing decisions they do not approve of. With an open mandate, however, that relationship and control are significantly diluted.
4. Over-Exposure
One of the most important pitfalls of an open mandate that sellers should bear in mind is the risk of over-exposure. As Jason Rohde, CEO of Lew Geffen Sotheby’s International Realty, notes, “When there are numerous ‘for sale’ signs, bearing the names of various estate agents, littering the pavement – and your home has appeared week after week in every estate agency’s advert in the local newspaper – your home could become over-exposed. This is an undesirable position to be in because the common perception will be that there is something wrong with the home and nobody wants to buy it.”
5. Not Getting Fair Value
A final concern of choosing an open mandate is sellers getting less than fair market value for their home. With numerous agents competing for a sale, lazier agents may well chance their luck and take an offer that is far less than fair value, and try to convince the seller otherwise. Underselling in this way is unethical, but unfortunately rather common.
Sole Mandates
Lew Geffen Sotheby’s International Realty strongly recommends that sellers opt for sole mandates. Sole (or exclusive) mandates are legal agreements that contractually bind an estate agency to market and sell a home within a pre-determined time frame. This makes the agency responsible for using their resources to the fullest extent in order to market the home in a targeted and appropriate way. A seller therefore benefits from a strategic marketing campaign and a concerted effort on the part of the agent to find the right buyer for the property.
Before diving into a sole mandate, however, sellers should be wary of the length of the mandate period. As Jason Rohde notes, “A seller should not agree to a sole mandate of longer than 120 days, depending on the circumstances surrounding the house sale.” This way, there is a healthy compromise between focused marketing efforts and seller freedom.
Back
Share this post
Print Article
