Beware of Sole Mandate without Performance Clause

There is no doubt that the best way to sell your property for the most money the market will pay is with a Sole Mandate.  By Sole Mandate I mean where you give an exclusive instruction to one estate agency to market your property effectively, use the correct strategies to attract you the strongest possible buyer enquiry, communicate honestly so you have the real market feedback, and then negotiate to get you the highest price.

There are 4 issues in play when it comes to the sale of your property:  The marketing you need, the service you need, when your property will sell, and how much it will sell for.

The 1st two issues are within the control of the estate agency you list with.  The 2nd two issues are in the hands of the market – the buyers.  Whilst the marketing and service will have an influence on these last 2 issues – the buyers will determine what your property is worth today and when it will sell.

When you enter into a sole mandate to sell your property it is only legal and binding when it has all of the following:  A selling price, a commission rate or amount, and an expiry date.  If any of these three are missing then your sole mandate is invalid and not binding.  Especially be aware of sole mandates that have as an expiry date “until sold”, or “until cancelled by mutual agreement”.  These are invalid and a breach of the Code of Conduct.

In addition to these three legal requirements for a sole mandate, you would be prudent to ensure your sole mandate also has the following:

  • A commitment in writing from the agent to market your home, with detail on what the marketing plan includes, specifically relating to when and where they will advertise.
  • A commitment to deliver a minimum service level to you, with the minimum expectation clearly indicated.
  • A clause allowing you to put the estate agency to terms should they not stick to their undertakings, failing which you can cancel the mandate without any penalty.

It’s amazing how many sellers sign sole mandates with none of these undertakings from estate agents and then feel trapped in their mandate without recourse.  If these commitments are not made in writing, then don’t sign the mandate.  Choose an estate agency that will commit to writing what they promise.

The Consumer Protection Act allows for the cancellation of a sole mandate on 20 business days’ notice, but not without reasonable penalty.  So you could take this route – but it would be much better to hold the estate agent to their promises and if they fail to do so after notice to rectify, make sure you have a cancellation clause without penalty to you.

A sole mandate with a company that does what they promise is the best way to sell.  But don’t be caught out by signing a mandate that doesn’t protect you in the event of non-performance.

Steve Caradoc-Davies

Principal of Harcourts Platinum, and Director of Harcourts South Africa

Email your real estate question to steve.cd@harcourts.co.za.

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