The differences between open and sole mandates plays an important role in the type of service you get before, during and after a sale of a house, notes Rawson property group.
Open mandates allow multiple agents to market your property, while sole mandates give one agent an exclusive contract to secure a sale.
In reality, however, the differences go quite a bit deeper, and play an important role in the type of service you get before, during and after a sale.
“A lot of people assume open mandates will achieve the best results,” says Tony Clarke, MD of the Rawson Property Group. “It’s true that open mandates encourage competition between agents, but contrary to popular belief, this seldom results in better marketing, negotiating and sales prices. In fact, the exact opposite is true.”
By creating competition between agents, Clarke points out that sellers unintentionally incentivise a rushed, low-profit sale. “Most agents would rather push through a low offer in order to sell quickly than lose a sale altogether because a competitor beat them to the punch,” he said.
“They’re also less likely to invest time and money on a comprehensive marketing plan when there is no guarantee that they’ll recoup that investment, which means open mandated properties are frequently underrepresented.”
In addition to this, sellers choosing an open mandate run the risk of being held liable for double commission if there is any doubt around which agent was the effective cause of the sale.
“If a person visits your property with one agent, but signs an offer to purchase with another, who’s to say which agent is responsible for that sale?” said Clarke. “Both may have valid claims, which means both commissions may be due.”
This kind of duplication of efforts can also create confusion during the marketing of your property, as keeping track of multiple agents can be a nightmare to say the least. “You’ll be faced with multiple show houses and viewings, multiple ‘For Sale’ signs on your wall, and your property will be duplicated across online platforms under multiple agency brands,” said Clarke.
“Not only does this destroy any semblance of exclusivity, it also makes it nearly impossible to keep track of what each agent is saying about your listing. It’s equally difficult to get accurate feedback from potential buyers to assess how well your property is being received, which makes it tricky to tell if an offer is a cheeky lowball or an accurate reflection of the current market.”
With a sole mandate, on the other hand, the entire process from start to finish is handled by one, dedicated agent or agency. “By signing a sole mandate contract, you’re ensuring your property gets the full attention it deserves,” said Clarke, “right from pre-qualification of buyers, to secure and accountable show houses and viewings, and a professionally-managed handover process after the sale.”
Since your agent is guaranteed their commission on the completion of the sale, they can safely invest in a broad-reaching marketing strategy, knowing that their costs will be covered by those earnings.
They will also have more incentive to negotiate higher offers from buyers, as their commission will increase accordingly.
“There’s no risk of losing the sale to a faster agent,” said Clarke, “which means the focus can change from quantity to quality – a higher offer is in the best interests of both the agent and the seller in a sole mandate situation.”