Joint Mandates – Not Good for Sellers


There seems to be a growing trend towards joint mandates being given by sellers.  A joint mandate is a mandate that is given exclusively to 2 or more estate agencies to market a property.real-estate

This differs from a sole mandate, which is given to one estate agency.  The estate agency commits to market the property and works for the seller to obtain the highest possible price in the market.

So why would a seller consider a joint mandate?  Generally, it’s because they don’t feel comfortable entrusting the sale of their home to just one real estate company.  They feel they may miss out on buyers that other estate agents are working with, and they feel that if they list with 2 or 3 companies they will get more marketing.

The reality, though, is completely different.  The first point to appreciate is that there is only 1 pool of buyers out there.  These buyers don’t belong to any real estate agency.  They are just buyers.  They may have an agency of choice, but irrespective of this, they will contact the estate agent that has the property listed that they want to see.  That’s a given fact.  I’ve never in my 25 years of real estate met a buyer who refuses to see the property they may want to buy just because their estate agent friend isn’t able to bring them to see it.  Buyers follow houses.

The 2nd misperception is that, when listing choosing-a-real-esate-agentfor 2 or more companies, you will get more marketing.  The best estate agencies know how to market a property well to attract all the buyers.  They will commit, in writing, to a marketing plan and invest a significant amount of money advertising your property.  If an estate agent isn’t prepared to commit in writing to a marketing plan on sole mandate, then don’t list with them.  Pick an estate agency that will.

When you list with more than one company by joint mandate, the estate agents reduce their marketing, because they are at risk.  So you may have 2 or 3 weak marketing plans, instead of 1 effective one.

But the biggest reason why a joint mandate is detrimental to a seller is that you are forcing your selected agents to sell your home at any price – not at the best price.  Why?

If any of the joint mandate agents get an offer they will motivate that you accept it – not because it’s the best offer, but because if you don’t accept it, one of the other joint mandate agents may sell it and then they earn no commission.

people_signing_banner1

Contrast that to a sole mandate agent.  This agent works for you to obtain the highest price.  If a lower offer comes in their job it to approach all other buyers who’ve shown interest to see if they want to offer.  You often get multiple offers – where buyers make their best offer to secure your home.  And isn’t that what you want as a seller?

There is no downside to a sole mandate with a reputable agency that executes a strong marketing plan to attract all buyers, and then negotiates for you to get you the best price.  Joint mandates do the opposite.  Your choice.

Steve Caradoc-Davies

Principal, Harcourts Platinum

Director, Harcourts South Africa

steve.cd@harcourts.co.za

What Service Do Sellers Want From Estate Agents?


It’s interesting to note that most sellers overlook the importance of service and communication when selecting an estate agent to market their home.  For many sellers, the price the agent puts on their property and the fee they charge appear to be the deciding factors.

It’s only later that they realize the agent does not set the market value – it’s the buyers that do this.  And so the “promise” of a higher price is usually just agent talk to buy your mandate.

iStock_000014759090MediumThe lower the fee an agent charges the less they will invest in the marketing of your property.  So whilst the fee is important to consider, what really matters is what marketing plan will be implemented because this will have a significant influence of the buyer interest and what you sell for.  Previous articles have dealt with the importance of strong marketing to attract the correct buyers.

But the issue of service is often overlooked, and usually to the detriment of the seller.  In our customer surveys the number 1 issue that sellers have had is the lack of service and communication from estate agents.  It’s only when you aren’t getting the service you expected that you appreciate how important it is.

What every seller needs is current feedback from the market on their property.  This means that every time an agent brings a buyer through your door you need to know what the buyers thought, even if they decide the property isn’t for them.  Skilled agents know how to get a genuine opinion from a buyer on a property.  What didn’t they like?  What did they like?  What do they feel the property is worth?  What other properties compete or offer better value?

This information is critical in determining if the list price is correct, and if there is anything that can be done to make the property more appealing to other buyers.  Sadly, many agents neglect to give this feedback.  Sellers get frustrated at being told: “they loved your house”  – when no one seems to make an offer.  That’s because the real feedback isn’t being communicated.  It’s impossible for everyone to love your house if no one is making an offer.

In addition to this, agents that deliver good 2277994-estate-agents-plansservice have regular review meetings with the seller to ensure everything is proceeding as intended.  Any issues are addressed quickly so that valuable marketing time isn’t lost, and buyer activity is maintained at high levels.

Another complaint that sellers have is that they never hear from their agent again once a sales agreement has been concluded.  A lot happens between the time a contract is signed and transfer takes place, and a seller needs to be kept informed.

When selecting an agent it’s important to ask what service and communication you will receive from them.  Ask if they will put their service undertaking in writing.  Our experience is that when seller and agent agree in writing there is a clear expectation set and the agent can then deliver what the client wants.  Be sure to include the issue of service when next selecting your agent.

Steve Caradoc-Davies

Principal, Harcourts Platinum

Director, Harcourts South Africa

steve.cd@harcourts.co.za

Commission Rates – What You Need to Know


money_time_value_red_dice_1600_clr

As with everything in life – you get what you pay for. Yes, we want to save money where we can. But we also know that cheapest is very seldom best. It’s all about the value you get for your money, not about how much it costs you.

To illustrate it simply: Most people don’t drive around in the cheapest car on the market. They drive the car that they believe gives them the best value for money, based on the features and comforts that are important to them.

The same is true when it comes to the fees you pay an estate agent for selling              your property.

Assuming that every agent would provide the identical marketing for a property, and the identical service, thus selling for exactly the same value, it would make sense to choose the agent that charges the lowest fee. That would give you the best value.

However, it’s a proven fact that agents don’t deliver the same marketing and the same service – and that both of these impact significantly on what you sell for. So surely it wouldn’t be the best value to choose the agent with the lowest fee, if it results in you selling for much less.

At the end of the day, what really counts for a property seller is what you get net – “in your Queensland-Real-Estate-Commission-Calculationpocket” so to speak.

Consider this: If Agent A sells your property for         R 2 million, and charges you 5% plus VAT,             you net R 1 886 000.

Agent B offers you much better marketing and service, and a selling strategy that attracts more buyers thus creating buyer competition. He sells your property for R 2.2 million, but charges a fee of 6% plus VAT. So you net R 2 049 000.

Which agent was the most expensive? It wasn’t the agent with the highest fee. It was the agent that offered you the worst value, and resulted in you netting a lower figure.

Sadly, all too often we see a seller selecting the agent with a low commission but offering little value. The result is a sale at a much lower price, and less in the pocket of the seller.

Does that mean the agent with the higher commission is always better value? No it doesn’t. It means the agent with the best marketing strategy, selling strategy, and that     can show how they attract the best buyers to get you the most in your pocket, offers      the best value.

Usually the cost of the better marketing and strategies is higher than the agent that offers very little. But be sure to ask your agent what value they will offer you. And here’s a tip: Get their undertaking in writing. Without a written marketing plan and service promise how can you hold them accountable?

Choose the agent who offers you the best value. It’s not the commission rate that counts – it’s what you take home that matters most.

Steve Caradoc-Davies
Principal of Harcourts Platinum, and Director of Harcourts South Africa

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

A Sellers’ Options When Their Mandate Isn’t Working


So you are listed on Sole Mandate with a real estate company and it’s just not working for you.  What are your options?

Before you judge your agent, consider the following truth:

An estate agent can’t control when a property sells, or how much it will sell for.  Both of these issues are controlled 100% by the market – and the market is made up of the buyers.

But an agent does have 100% control over their service, as well as the marketing they deliver. 

When you signed your sole mandate you hopefully chose your estate agent based on the written marketing plan they proposed to you, as well as the level of service and feedback they undertook to provide.

If they are delivering on their service and marketing undertaking, then it would be unfair to dismiss them, as they are sticking to their agreement.  Perhaps the marketing you agreed on is not sufficient, in which case you could ask them to look at increasing this.  Or perhaps the market is resisting your current list price.

However, it may be that you are not getting the marketing and service you were promised in writing.  If this is the case, there should be a clause in your mandate agreement allowing you to give the agent notice to rectify their breach, failing which you can cancel.  Make use of this clause._GOD4499-adj

If there is no specifically stated obligation for the agent to market your property in the mandate, then you will have difficulty terminating the mandate.  I would suggest speaking to the principal in order to resolve this.

Lastly, you have the option to terminate as provided for in the Consumer Protection Act.  This you can enforce on 20 working days’ notice.  The Act allows for cancellation and a reasonable cancellation fee can be charged – so beware of this.

Whilst I strongly believe a sole mandate is the best way for a seller to sell their property, I would advise against signing a mandate if the mandate does not contain all three of these:

  • A written marketing plan that you can hold the agent accountable to;
  • A written service and feedback undertaking that you can hold the agent accountable to;
  • A clause allowing you to place the agent on notice to rectify a breach to either of the two above clauses, failing which you can cancel the mandate without penalty.

If you sign a mandate without these inclusions you are taking a grave risk.

If you already have concerns about your current mandate then I would strongly recommend you start researching Plan B.  Call in other agents and find out exactly what marketing and service they can offer you in writing, and what their market research shows regarding the value of your home based on their Comparative Market Analysis (see last weeks’ article).  Don’t make the same mistake twice!

Are you permitted to speak to other estate agents.  The simple answer is “Yes”.  It’s a free country.  You may speak to anyone you want and there is nothing wrong with researching what other options may be open to you should your current mandate expire with your property unsold.

Ethically, another agent may not encourage you to terminate your current mandate.  But they are allowed to explain their services, give you market information, and let you know what options will be open to you later, once your mandate has expired.

Your current agent may not take well to your research.  But don’t be deterred.  If they are delivering on their marketing and service promises to you then you will no doubt be inclined to extend their mandate should it be necessary.

Demand the marketing and service you need to sell – you deserve it!

Steve Caradoc-Davies

Principal of Harcourts Platinum, and Director of Harcourts South Africa

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