You have two options when it comes to selling your home. You can opt for a sole mandate, where you appoint a single estate agent and they are granted the exclusive right to market and sell your home.
Your other option is an open mandate, which means you allow multiple qualified estate agents to market your house and you accept the best offer.
On paper, an open mandate might sound like the best option because of the wider exposure you’re likely to get, but Rawson Property Group MD Tony Clarke says it actually works the other way around when it comes to property sales.
“The thing about competition is that it creates its own incentives and those incentives don’t always align with your own,” he says.
He says that the nature of the increased competition tends to lead to a situation where an agent prioritises a quick sale over a good price.
Open mandate agents are under pressure to seal the deal first, so it’s understandable that they would be more likely to push through a lower offer and guarantee their commission than dilly-dally with negotiations and risk losing out on the sale altogether.
“For similar reasons, agents on open mandates typically invest less time and money on great marketing since they have no guarantee that they’ll be able to recoup that investment if the sale goes to someone else,” Clarke warns.
“That means open mandate homes are often underrepresented despite their many agents, with poor quality photographs and careless – or just plain unenticing – listings.”
The other drawback to an open mandate is that it creates additional admin for home sellers because you have more people to follow up with in terms of potential offers received. Furthermore, you’ll also have to make your home available for many more viewings which can be an inconvenience.
“It can become a bit of a logistical nightmare and certainly destroys any impression of exclusivity buyers might have had. It also makes it difficult to get accurate feedback on how your property is fairing, what buyers are saying and what market conditions really are,” he says.
Open mandates can also lead to disputes about which agent is ultimately responsible for the sale.
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“If a buyer visits a show-house with one agent, but negotiates and makes an offer via a different agent, you could be faced with two parties who both contributed to the sale. Unless your contracts are extremely clear and you know exactly who did what and when, that could put you in a position of having to pay double commission,” Clarke warns.
If you choose a sole mandate it gives your estate agent the opportunity to pay full attention to your property because their commission is guaranteed and because of this, Clarke says they are likely to spend more money on marketing campaigns and put in more effort when it comes to negotiations the best deal because it’s in their best interest to do so.
“The higher the price they achieve, the better they are rewarded for their efforts – an incentive that aligns their goals far better with those of the average seller.”