What is the difference between an open, sole, and dual mandate?

What is the difference between an open, sole, and dual mandate?

The type of mandate that you grant to your agent could make the difference between a successful sale in a short period, or your property simply sitting on the market.

For an agent to market your property, the seller is required to grant a Mandate to the agent to market and sell the property. There are generally three types of mandates:

Open Mandate - allows the seller to appoint multiple estate agencies to market the property simultaneously. Under this agreement, only the agent who successfully secures a sale by being the effective cause earns the commission. The drawback is that agents may not give it all their attention. There is also the risk of "double commission" if multiple agents claim to have introduced the buyer. Coordination of viewings can be complex.

Joint Mandate - the seller appoints multiple agencies to market their property, with a pre-agreed commission structure enabling the agents to share the commission. This type of mandate aims to increase the reach and reduce the risk of commission disputes but might again not necessarily mean that agents would give it all their attention as it involves sharing the commission.

Sole Mandate - these grants exclusive rights to a single agency to market and sell the property for a specified period. This means the seller cannot appoint other agents or sell the property privately during that time without potentially owing commission to the mandated agency.

a Sole Mandate is an exclusive agreement between the seller and a single estate agency, granting them the sole responsibility to market and sell the property within a specific timeframe.

These mandates are typically for 3 to 6 months depending on the property and needs of the seller. During this period, the seller cannot appoint other agents or sell the property privately without being liable for commission to the sole mandate holder.

The biggest benefit is that this exclusive arrangement motivates the agent to dedicate their focused attention and comprehensive marketing efforts towards the property, aiming to achieve the best possible price within the shortest possible time.

Since this is an agreement with the client, the agent would focus their attention and marketing efforts to achieve success for the seller, knowing that they risk earning no income if there is no sale. The agent would therefore use all available marketing tools as well as networking to source a suitable buyer and an offer as soon as possible.

Typically, the agent will put together a full marketing plan with regular feedback to the client on the progress and provide guidance to the seller every step of the way.

A sole mandate is a legally binding contract governed by the Property Practitioners Act (PPA) of 2019 and the Consumer Protection Act (CPA) of 2008. To be valid and enforceable, the sole mandate must contain specific information, ensure transparency and protect both the seller and the property practitioner (estate agent).

A mandate document must be in writing, signed by both the seller and the agent, and include clear legal details for all parties, the property, agreed asking price, commission terms, special conditions and legalities, as well as an expiry date. It must outline the responsibilities as required by law and include a signed mandatory disclosure of the condition of property from (later to be attached to the sales agreement as well). It should also include a marketing plan.

Experience shows that a sole mandate achieves the best results for clients. Typically, it enables the property to achieve a higher price and sell faster compared to the market averages.

Sellers should, however, also be upfront with their agent about their needs. Always consider what the minimum price is that you could accept so that the agent is empowered to negotiate the best outcome.

Another crucial aspect is deciding whether to sell with a sole or open mandate. While an open mandate allows several real estate agencies to market a property at the same time, a sole mandate places the responsibility on a single agent, which increases focus and reduces complications.

The truth is that it is often far more effective to sign a sole mandate and allow one agent the space to secure the best sale. A sole mandate is also a more convenient option because sellers will only have to liaise and deal with one agent rather than several.

It may seem like intuitive logic to assume that the more agents you have marketing your properties mean more opportunities to sell them. However, that is not the case. Simply put, it's almost always quality over quantity.

To helps sellers, understand what they are agreeing to, the sole mandate is a written agreement with the seller's signature included. The estate agent is required to explain the legal ramifications and they must also supply a copy of the agreement to the seller. In most cases, a sole mandate will expire after 90 days.

A mandate, which is not stated to be irrevocable, can be cancelled without notice by the person who conferred the mandate. That being said, most agents use sole mandate forms that invariably stipulate that the sole mandate is irrevocable for a certain period.

Sellers might also come across something called a dual mandate. This is also a sole mandate but signed with two or more agencies, rather than just one. Usually, in these scenarios, whoever of the two mandated agents sources the buyer will be entitled to the commission.

Similarly, an open mandate means that your property is listed with more than one real estate agent from a variety of agencies, each of whom will be marketing and trying to sell your property. The only caution to sellers who choose this route is that they may run the risk of being held liable for double commission if there is any doubt about which agent was the effective cause of the sale.

For this reason, it is recommended that it is always better to sign a sole mandate. Selling your home can be stressful, and quite frankly, having multiple agents trying to sell your property may add to the chaos. It's far more effective to sign a sole mandate and allow one agent the space to secure the best sale.

Also, choosing one great agent to deal with this important transaction has several benefits, especially if you find an agent with whom you can form a trusting, working relationship. If you'd like to get a trusted property professional like this in your court today.

Extract from Property24