As sellers return to a more upbeat marketplace, a question which often arises is: why should I sell my home on a sole mandate – in other words exclusively through one real estate agency.
Howard Markham, national manager – business development for Pam Golding Properties, explains below the facts and practical reasons why a sole mandate with a reputable estate agency is the best option for a seller:
Simply put, a sole or exclusive mandate is a formal instruction to an agent to have the exclusive right to sell a client’s property on their behalf for a period of time, and this can range from three months to as long as two years. This agreement precludes the home owner from selling the property in his or her private capacity, and it means that during the period of the sole mandate anyone interested in buying the property must deal solely with the appointed agent.
There is a school of thought which may then argue that surely the greater the number of agents listing the property the greater the exposure to potential buyers and so the quicker the sale? This is not so, and is further exacerbated by a misconception that estate agents simply want control of the mandate for all the wrong reasons.
The fact is a successful real estate transaction relies on far more than simply the number of buyers in the market. Just like any other product, a home needs a professional marketing plan, as well as an insightful pricing strategy and an intelligent buyer strategy. This is a multi-faceted process which needs to be managed consistently, carefully and strategically in order to achieve the desired result – a successful sale at the right price and in a reasonable time frame.
This process also needs a considered approach, with all factors managed in unison and controlled and adapted as market and buyer feedback is received from the agent on a regular basis. Without this, you may well be entrusting the sale of your home to luck, which doesn’t make sense regarding what is most probably your highest valued asset.
The question to consider is – can this process occur efficiently and effectively when it’s in the hands of a number of different agents who are naturally in competition with each other? When a number of agents are vying to close a sale on a property, they will want to do so before another agent does. This is where another myth comes to mind, that competing agents will close the deal quicker. This is fundamentally flawed by the fact that in haste these agents will ‘throw’ as many buyers at the property as quickly as possible, hoping one will ‘stick’ before one via another agent. These buyers are often unqualified and are probably likely to offer a price way below that which the seller is realistically asking.
This means that each offer exists in isolation, as opposed to being properly managed by one professional agent towards maximum market value. So a seller may end up accepting an offer from an agent not knowing that another agent was dealing with a buyer who may offer more. This obviously then compromises the seller from a price perspective because the situation which arises is that agents are competing with other agents rather than buyers competing with other buyers – which would be the case if all offers were coming in through a single agent channel. This is one of the more critical advantages of a sole mandate, in that the agent is in a position to negotiate the best deal for the seller as a result of being in control of incoming offers.
It is useful to consider this analogy – that tasking a number of agents from different companies with the marketing of your home is akin to a company launching a new product and allowing different sales teams to package it differently, price it different and market it differently, thereby leading to differing perceptions of the property in the marketplace. This leads to a lack of focus and confusion in the market. Bear in mind that buyers are increasingly savvy due to easy access to market information via the internet and the rapid evolution of technology, so they are able to formulate their own buying strategies. They will be quick to pick up signals of confusion and dilution of the property’s impact in the marketplace as a result of the somewhat haphazard marketing that surrounds open mandates. It makes sense that if there is a buyer out there for your property, that they will find it if it is properly marketed through a reputable estate agency – several estate agencies do not necessarily mean more buyers.
In addition, estate agents work on risk, which means they need to spend time, energy and money in managing the marketing and sale of a property – which can be extensive, without the guaranteed prospect of a return on this investment. So if the property does not sell for whatever reason, or if the seller decides to take it off the market, the agent receives no fee, in that they only receive commission if the property is sold. It is logical therefore that an agent be given the security of a sole mandate so that they may maximise their input of time, energy and financial investment without the threat of all their efforts coming to nought due to the property being sold by a competing agent. In fact, it is highly unlikely that much time or marketing investment will be spent on a property without this, as the risk to the agent then escalates substantially.
Bringing a property sales transaction to a successful conclusion takes time – to qualify buyers, devise and run a marketing campaign, fine-tune pricing taking into account market dynamics and appetite, and to secure the sale with the purchaser signing the sale agreement. Awarding a sole mandate to an agent gives them time to do the best job on your behalf, thereby maximising the return on the fee that you pay them. Quick sales are not necessarily uncommon, but they are more the exception than the rule. And the exclusivity of the relationship between the seller and agent holds the agent accountable for results and gives each party time to agree to any changes in marketing and pricing strategy should this be necessary. Your agent is also responsible for providing regular feedback on progress.
With several agents clamouring to throw unqualified buyers at you, as would be the case on an open mandate, without this degree of control and focus, it is highly unlikely that the most optimal result will be achieved for the seller. In a nutshell, the value that a seller achieves on a property sale is directly influenced by the real estate service that goes into it, and this service is maximised through a sole mandate.
For further information contact Pam Golding Properties on 021 7101700 or email firstname.lastname@example.org.