8 min read

Understanding The Real Estate Mandate

Shaun van Wyk
· May 2, 2024
Understanding The Real Estate Mandate

Selling your home should never be an angst-ridden experience that has you up at night staring at the ceiling of your bedroom wondering how you got into this mess. However, it can be, especially if you don’t do your homework before having a For Sale board erected on your property. The first step in preventing any issues is understanding what your real estate agent means when they mention the term, mandate.

Everyone needs to move at some point in their lives. Whether it’s because you’ve been transferred after getting that promotion you worked hard for, or you feel it’s time to find a home with at least one more bedroom; no matter the reason, if you own your home the first step is to sell it.

Whilst taking the time to find the right real estate agent (or agents) for you, you may be bombarded with real estate speak, jargon that the agent may know and presume you understand.

One of those terms you should be aware of and need a solid grasp on is ‘the mandate’. Not only does a mandate have a number of legal aspects that you should be acquainted with, but there are different types of mandates within real estate too. Each mandate has its reason for being and some may suit your needs more than others.

Avoid Any Issues - Understand Your Mandate

A scenario that often catches sellers and agents off-guard involves the misunderstanding of mandates. Here's how it typically unfolds: A seller, already bound by an agreement with one realtor, might inadvertently invite another agent to market their property. This happens because the seller might not fully understand the restrictions imposed by the mandate they've signed.

This kind of mix-up can lead to some complicated legal or ethical issues. It’s crucial for sellers to understand the specifics of any mandate they enter into. By familiarising yourself with the different types of mandates available, you can ensure you are clear on the terms and avoid inadvertently breaching an agreement. This kind of awareness not only protects you as the seller but also maintains a smooth relationship with your real estate agent.

What is a Mandate?

A mandate, in short, is an agreement (much like a contract) between you, the property seller, and at least one realtor. Once signed, the mandate allows the agent to both market and sell your property on your behalf.

This mandate outlines the terms and conditions of the arrangement, which includes the agent's responsibilities, the duration of the mandate, and the agreed-upon commission structure.

Mandates can vary in scope and exclusivity, with different types offering sellers varying levels of control and market exposure.

The Different Types of Mandate

The Sole Mandate

A sole mandate is a formal agreement that gives one agency the chance to market and sell your property for the mandate period, a predetermined amount of time that you agree on.

With this mandate signed, your selected agency knows they have only this period of time to concentrate on finding a buyer for your home. Because of its exclusivity, it’s believed the firm can devote more resources to marketing and take the time to locate the ideal client.

The agent with the mandate may, if they choose, allow other agents to bring their buyers to view the property. In this case, if a sale is made, the selling agent splits their commission with the agent who brought the buyer.

In the event of a mandate extension, sellers may choose to convert to an open mandate if a buyer hasn't been found or they may sign a new sole mandate. Also worth noting, a seller is entitled to sell their home privately during this particular mandate if the buyer was not introduced by the mandated agent. The same applies to an open mandate.

The Open Mandate

An open mandate means that you ask a number of realtors to market your home. The main advantage of this practice is that an agent may have a potential buyer in their books already, someone who may have made an enquiry about another home within the same price bracket or is looking to buy in your specific area.

Whilst on paper this seems like the ideal way to sell your home with several realtors, there are a few possible negative outcomes you should be made aware of.

With an open mandate, agencies may allocate fewer resources to market your property, potentially leaving some agents at a disadvantage. Sellers should also be mindful of the potential for double commission liabilities. This can occur in the event that there is disagreement among agents over who brought about the sale of the home through their means.

Double Commission Claim: When two agents maintain they are the reason for the sale of the home and thus should be receiving the commission, it is known as a double commission claim.

This kind of situation usually occurs when there is a disagreement over which agent was the actual reason behind the sale. Who showed the buyer the home, negotiated the sale, or helped to complete the transaction could be some of the reasons for the disagreement. To identify who should receive the commission rightfully, resolving a double commission claim frequently calls for a thorough review of the relevant documentation and may involve mediation or legal actions.

An Exclusive Mandate

Building upon the foundation as set by the sole mandate, the exclusive mandate gives the chosen agent exclusive rights to market and sell the property within a defined timeframe.

Exclusive mandates may include perks such as higher marketing budgets, priority placement on property listings (you’ll often notice “Sponsored” ad listings on sites like Property24 and PrivateProperty), and tailored marketing strategies to maximise exposure of your property to attract potential buyers.

This type of mandate also potentially fosters a closer partnership between the seller and the agent, with both parties committed to achieving the desired outcome. It’s best to employ this strategy with a trusted agent though.

Here’s the difference between a sole mandate and an exclusive mandate: An exclusive mandate means the seller may not sell their home privately. If they do, they still owe the real estate agent commission.

The Joint Mandate

A joint mandate, or multi-agent listing, is a mandate in which numerous agents or agencies are approached to market and sell a property at the same time, as opposed to a sole mandate where only one agent is permitted.

This means that multiple agents or agencies may be involved in marketing the property and attracting possible purchasers. However, the commission is often split among the agents or agencies participating, and the requirements of cooperation are specified in the joint mandate agreement.

Feature Sole Mandate Open Mandate Exclusive Mandate Joint Mandate
Definition Exclusive rights to one agency Multiple realtors market the property Similar to sole, with more benefits Several agents market simultaneously
Duration Predetermined period N/A Defined timeframe N/A
Agency Focus High; dedicated to finding the ideal buyer Lower; less resource allocation per agent High; includes higher marketing budgets, priority listings Varies; depends on agency cooperation
Commission Sharing Possible if other agents bring buyers Potential disputes over commission claims Exclusive to one agent unless otherwise stipulated Commission is split among participants
Selling Privately Allowed if buyer not introduced by agent Allowed Not allowed without owing commission to the agent Allowed
Extension/Conversion Possible to extend or convert to open N/A Typically renews with the same agent under similar conditions N/A
Potential Risks None specific except general market risks Double commission claims Requires trust in agent due to exclusivity and financial commitment Commission disputes

Choosing The Right Mandate

Choosing which mandate suits your needs is subjective, at best. When speaking to agents exclusively, they may push for an exclusive mandate or a sole mandate. When speaking with friends and family, each person may have a different opinion. Ultimately, you as the seller need to weigh what you consider the right choice by considering the pros and cons of each mandate on offer.

Taking the time to ask the agent about their marketing strategies for your property under a specific mandate is crucial. You should also take the time to meet a few agents before making your decision. What may look good on paper isn’t necessarily the right choice for you, and only you can make the right decision.

With the information on mandates provided, you are a few steps closer to making the right call when choosing what is best for you regarding the sale of your home. When your house is sold, and you are ready to move into your new home, the next decision you need to make is far simpler.

Making the Right Choice with Wise Move

After avoiding the possible game of ‘chutes and ladders’ that is the mandate in real estate, you can rest easy knowing that once your house is sold and you are ready to move, there is a company that can help you do just that: Wise Move.

Wise Move’s mandate is to link you with reliable local moving services trusted by countless South Africans, thanks to its expansive nationwide network. When you're ready, Wise Move ensures you find the ideal moving service that caters to your needs.

Speak to Wise Move, they’ll help you make the choice with whom to move, easy.

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