Estate agents say the way to sell quickly and at the best possible price is to grant only one agency the right to put your property on the market.
Estate agents are urging Johannesburg property sellers to put their homes on the market through sole mandates if they want to sell their properties quicker and fetch the highest possible prices.
This is contrary to general seller belief that selling a home via open mandate, which allows a number of agencies to find buyers, gives sellers better chances of sales.
“There is no doubt sole mandates consistently deliver the best results for sellers,” says Samuel Seeff, chairperson of the Seeff Property Group.
“There might be the odd example where an open mandate has brought about a sale, but time and again our own sales records and the market as a whole has shown a sole mandate delivers the best results.”
Other agents agree, explaining that while open mandates may make sellers believe that having more people out looking for buyers will guarantee a good sale, the opposite is true.
This is because one estate agent working on the sale of a home will be more committed to the project than when they are competing with many other agents.
Tony Ketcher, a regional manager at Seeff, says a real estate company working on a sole mandate will be more willing to allocate marketing spend to the project because they are not competing with other agencies.
“There is also an argument that says if an estate agent is competing with other agents for the sale, their interest is less on getting the best price and more on selling before another agent does, and this is not in the best interest of a seller.
“Sometimes a selling agent needs to hold out a bit to negotiate a better price for the seller, and this is not always possible when agents are competing,” Ketcher says, adding that, in a sole mandate, a seller can be “very specific” about the service expectations.
The sole mandate can also be structured in such a way that if the agent does not deliver on the expectation, the mandate can be cancelled.
Even with developments and luxury property, Seeff specialists say sole mandates consistently deliver the best results.
“High net-worth buyers are very status conscious and particular about what they will buy, and will seldom buy a property that is overexposed,” explains Lance Cohen, a luxury market specialist for Seeff.
Cohen says sellers who are aiming to sell to this market should guard against listing with multiple agents.
He says sole mandates give estate agents full control of properties.
“The activity on the property is also monitored and controlled by the sole agent so the seller’s security is not compromised,” says Soukop Property Group’s Michelle Veneruso.
Echoing the thoughts of her fellow property professionals, Veneruso says an estate agent who is granted a sole mandate acts in the interests of the seller, creating a situation in which buyers compete for the property.
She says this maximises the opportunity to reach the best selling price.
According to Veneruso, other benefits of granting sole mandates to agents include:
*Agents give continuous feedback, price management, counselling and advice.
*Agents are accountable for results and actions.
*It is likely sole mandate agents will negotiate with potential buyers for the highest possible selling price.
*There is no likelihood of disputes around agent commission.
*There is room to negotiate commission structure.
*Agents are likely to give sellers good advice, help with home staging and remember important factors like turning lights on and off.
“If there is an open mandate an agent will not do all of this and he/she will not want the place to look good for other agents.”
Explaining the competition between competing agents on open mandates, Veneruso says: “An open mandate creates a situation where the same pool of buyers that would have looked at the home via the sole mandate, now manipulate the agents to negotiate a lower price.
“Instead of the buyers competing for the property and paying more, the agents compete for the buyers and take lower offers to the seller, telling them why they should accept the offers.”
Veneruso says that before putting their home on the market, a seller should call in at least three different agencies to value the home, and then choose the middle valuation as this is most likely the realistic property price.
“Agents sometimes try to win a seller with a high price and this is why one should always get a minimum of three. If you put your property on at too high a price, it won’t sell and will become overexposed.”
Many sellers who list their homes on open mandates eventually change to sole mandates, according to agents. But some who do put their properties on the market via sole mandates and change usually do so because they are disappointed in a sole agent who “did very little”, Veneruso says.
She adds: “Choose wisely. Give an agent two months with a sole mandate, with an option to mini-list at some stage. This is where the sole mandate agent invites in other agents in the area. People who start with a sole mandate and then change to open, because they are not happy with that particular sole, usually end up giving someone else a sole a little further down the track.”
In addition to sole mandates, Seeff says properties also need to be given to the right area experts as it does not help to grant a sole mandate to an agent just because they promise you a high price.
“Area experts usually have a waiting list of buyers and start working a new listing from the minute the seller signs the sole mandate agreement.
“Skilled agents will assist with pricing your property at the right level to attract a good offer and, according to a recent study in America, undertaken by Collateral Analytics in conjunction with San Diego University professor Norman Miller, tend to achieve higher sales prices for properties than comparable for-sale-by-owner properties – enough to offset their commission fees.”