Open vs Exclusive Mandate: A Critical Selling Decision
Category Sellers Guides
Throughout the entire property selling process, you will need to make several important decisions along the way. These include; when you take the property to market, the agent you choose to represent you, the mandate type you select, the price you list at, the offers you accept and the attorneys you appoint, to name but a few. The choices you make will have a direct impact on the time it takes to sell your property; the level of service and frustration you experience throughout the journey; the price you ultimately achieve and the commission amount you end up paying.
However, no decision is more critical to the success of the sale of your property than the mandate type you choose.
An Open Mandate is when you give several different agents from multiple estate agencies the right to market and sell your property. At first glance, this option appears to be the most beneficial for the seller and appears to make good logical sense. Surely the more agents you have marketing your property the more likely you are to sell your property and achieve the best result? However, according to Scott Allnatt, managing director of Shelley Residential, this is not the case. More agents hired to sell your property does not necessarily mean more potential buyers and the quicker or easier selling of your property as many may assume.
“Whilst an Open Mandate sounds like the best and most attractive option for some sellers, the reality is that an Exclusive Mandate is more likely to result in a quicker sale, at a higher price with fewer frustrations for the seller.”
Most open mandates are merely verbal discussions between the seller and several different agents - who are quick to make promises without putting anything in writing. However, an Exclusive or Sole Mandate is a formal agreement whereby you instruct and appoint a single agent to represent you and your property and you give that agent the sole right to market and sell your property. Once you and the agent have agreed to the terms and conditions of the mandate, everything is clearly specified in writing, to prevent any confusion or miscommunication and avoid any disagreements down the line.
By having the sole right to market and sell your property, an agent is guaranteed their commission on the successful completion of the sale. Therefore, with the security of knowing that their costs will be covered, the agent can safely invest the time, money and effort required to expose your property to the largest possible pool of buyers and effectively sell your property. An agent with an Exclusive Mandate is highly motivated to develop a custom marketing plan, spend significant money on the advertising and promotion of the property, and dedicate the time and effort required to pre-approve prospective buyers, arrange viewings and ultimately negotiate the best price on your behalf.
Sense of Exclusivity
With an Open Mandate, you will end up with several different agency signs on the verge of your property, find your property listed on multiple agency websites and duplicated several times over on the property portals and other digital platforms. What sellers don’t understand is that this cheapens the property in the buyers’ eyes and creates the impression of a desperate seller. Conversely, an Exclusive Mandate creates a sense of exclusivity with the buyers and puts you in a far stronger negotiating position.
Improved Communication and Coordination
With so many parties involved, Open Mandates can often lead to confusion and miscommunication between you, the several different agents and the potential buyers. Coordinating marketing and advertising activities, scheduling appointments, presenting offers and overall communication can become far too chaotic. An Exclusive Mandate ensures that everything runs smoother with far more clarity as only one agent is responsible for the coordination of all marketing and selling efforts. This streamlines the entire process, reduces frustration and improves communication on all fronts.
Higher Purchase Price
By opting for an Open Mandate, sellers are unintentionally encouraging competition between agents which will ultimately result in a quick, low-priced sale. To avoid losing out on a sale and their commission, most agents will rush to sell the property to the first potential buyer before another competitor agent does. Without any risk of another agent selling the property during the mandate period, an agent with an Exclusive Mandate is far more incentivised to negotiate higher offers from buyers, as their commission will increase accordingly.
Avoid Double Commission
In addition to this, an Open Mandate is more likely to result in a scenario where you end up paying double commission on the sale of your property. If a potential buyer was introduced to your property by one agent but concludes the sale with a competitor agent, then both agents may have a valid commission claim. However, with an Exclusive Mandate there is never any doubt about which agent was the effective cause of the sale and therefore you avoid the risk of being liable for double the commission.
If you are willing to make a commitment to a single agent, by awarding them with an Exclusive Mandate to market and sell your property, then that agent is more likely to reward you with a simple, quick and seamless sale at the highest possible purchase price - free from confusion and double commission claims. Just be sure that your agent of choice has the marketing expertise, partnerships, and networks to expose your property to the largest possible pool of Buyers and deliver results quickly and effectively.
Author: Shelley Residential