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Sole vs open mandates: Estate agents weigh in

The differences between open and sole mandates may seem obvious at first glance – 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 says Tony Clarke, managing director of the Rawson Property Group, 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. It’s true that open mandates encourage competition between agents, but contrary to popular belief, this seldom results in better marketing, negotiating and sale 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 explains. “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?” says 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,” says 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,” says 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.

“With a sole mandate there’s no risk of losing the sale to a faster agent,” says 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.”

Sole mandates certainly seem like the best option for a successful sale, but what happens if you get stuck with an agent who doesn’t perform? “It’s a common concern,” says Clarke, “which is why our sole mandate contracts at the Rawson Property Group can be cancelled without reprisal. We want our sellers to get the best possible service, and if they feel they aren’t getting it from us, we believe they have every right to go elsewhere.”

Not all agencies offer this kind of flexibility, so it is highly recommended that you check your contract carefully. “Whomever you choose, make sure they have an excellent track record in your area, are well-represented online, and have the respect of the community in which they are working,” says Clarke. “If they tick all those boxes, a sole mandate is definitely the way to go.”

HomeBid GM Gary Sacks comments that being a low commission estate agency, HomeBid only charges sellers 1.95% commission to sell their homes. This enables sellers to list with HomeBid at a lower selling price while still receiving their required net amount in their pockets.

“In doing so HomeBid is able to attract many buyers looking to save on the asking price and we therefore have a large buyer data base. For this reason we believe in a short sole mandate as should we not sell your home in the required period, it is only fair to open it up to other agents.

“If a seller is insistent on an open mandate, HomeBid will encourage them to take advantage of the 1.95% commission we charge enabling us to list the home at a lower selling price therefore attracting more buyers. The seller will still realise the same net amount in their pockets as they would if they were using traditional estate agents charging up to 8.5% commission.

“In these difficult economic times a lower selling price attracts many more buyers as interest rate increases makes affordability a major issue for buyers. It’s a win – win – win scenario as sellers receive the same net amount in their pockets as they would if they used a high commission estate agency at 8.5% plus Vat commission; many more buyers put in offers at the lower selling price and we receive our 1.95% commission”.

Dr Andrew Golding, CE of the Pam Golding Property group says a sole or exclusive mandate can range anywhere from three months to as long as two years.

“A successful real estate transaction relies on far more than simply the number of buyers in the market. Just like any other product, a home needs a professional marketing plan, as well as an insightful pricing strategy and an intelligent buyer strategy.”

An open mandate system relies on the myth that that competing agents will close the deal quicker. in haste competing agents will ‘throw’ as many buyers at the property as quickly as possible, hoping one will ‘stick’ before one via another agent. These buyers are often unqualified and are probably likely to offer a price way below that which the seller is realistically asking.

This means that each offer exists in isolation, as opposed to being properly managed by one professional agent towards maximum market value. The situation which arises is that agents are competing with other agents rather than buyers competing with other buyers – which would be the case if all offers were coming in through a single agent channel. This is one of the more critical advantages of a sole mandate, in that the agent is in a position to negotiate the best deal for the seller as a result of being in control of incoming offers.

In addition, estate agents work on risk, which means they need to spend time, energy and money in managing the marketing and sale of a property – which can be extensive, without the guaranteed prospect of a return on this investment.

Quick sales are not necessarily uncommon, but they are more the exception than the rule, he says.


Alison Goldberg is the former property editor of Business Day (1985) and the Financial Mail (1991-99). In 1995 she won the Sanlam Financial Journalist of the Year Award. She has edited such titles as National Constructor and The Miner in Australia and has freelanced for The Star, The South African Jewish Report and The Jerusalem Post.

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