The 5 questions to ask an agent before you sign the mandate
I am a first time seller and I was hoping you could assist me with some questions please:
I have quite a few estate agents that have shown interest in helping me sell my property, but I’m not sure what the correct questions are to ask them, in order to help me with my decision on who to go with.
I contacted an agent from 3%.com as the agent is already selling another unit in my complex, but her board has been out for quite a while, so I asked her if it is difficult to sell in the complex, and she replies she would have been able to sell the property if it hadn’t been for the special levy. We do have a special levy in place, so I asked her if that would impact the sale and she said no (which is a contradiction).
She told me to make it an open mandate so she can bring other clients for viewing. Is open mandate better than sole mandate?
I’m a bit clueless about the whole process, so would really appreciate any advice.
Thank you – Robyn
Hi Robyn, the fact that you have already spoken to a low commission agency is in my view an excellent start. The choice of which agency to use is ultimately yours, as is whether you sell using a sole or open mandate.
It is, however, important that you understand the options before making your decision – saving up to R65,000 per R1m in commission when working with HomeBid who charge 1.95% commission for example is not to be scuffed at.
As you’ve highlighted there are some questions you can and should be asking prospective agents before deciding who to partner with.
Q1: How will you advise me on the right asking price?
An experienced agent should bring this aspect up without you even asking. There are two ways of determining the right asking price – a valuation done by the agency using deeds office information or by using the services of a registered, professional valuer.
As an example, should HomeBid be tasked with selling your home we will always, as a starting point, determine the total square metreage of your home, number of bedrooms/bathrooms and any special or unique characteristics that sets your property apart from other properties in the complex. This information will assist us in determining the market comparative price as a starting point.
These are the kind of questions and factors an experienced agent should discuss with you when you ask question number one.
Q2: How will you ensure that my home is sold in the time period I need it to be sold?
I’m sure you already know the timing of sale that will suit your needs; do you need to sell quickly for personal reasons, do you want to sell within say six to nine months? Or can you afford to wait. This is an important question to ask as the timing of sale has a significant impact on the right asking price. You need to ascertain if the agents you are looking at working with understand this.
Should you need to sell quickly you will probably need to sell your home at market price or slightly below. In this case I really believe making use of a low commission agency is your best route. HomeBid, for example, charges 1.95% commission plus Vat upon the sale and registration of the property in the buyer’s name. This will enable you to drop your price by up to 6.5% plus Vat and still come out with the same amount of money if you had used a traditional estate agency at 8.5% plus Vat commission.
If you are not under time pressure to sell you can afford to price your home a little higher. In this case you might feel that your choice of estate agency to use is wider again but you should enquire as to how the agent plans on marketing your property to find you the right buyer sooner than later.
Q3: What impact do you believe the special levy that is in place will have on my home’s selling price?
An experienced agent should understand this relationship. In our experience buyers in complexes are very aware of monthly running costs and are negative towards complexes with higher than average general levies. Special levies for a specific purpose usually add value to a complex but not in every instance. Experienced agents should thus be looking to establish the details of the special levy and for how long it will still apply. Ideally the agent you decide to work with should understand the impact of levies on the sales price.
Q4: Considering the current economic environment, do you believe now is the right time for me to sell?
An experienced agent should have a handle on prevalent economic conditions and a good understanding of the market in your area and what impact this has on your sale.
Right now the economic environment in South Africa is under threat from a possible junk bond status downgrading from global rating agencies in early June. Should this occur then interest rates will be forced to rise quite sharply and this will negatively affect affordability and demand for certain homes. Home prices at higher levels may reduce and demand for more affordable homes may rise with a possible increase in home prices, if demand meaningfully exceeds supply. The agent you decide to work with should be able to comment on what this means for you.
Q5: What experience, track record or specialised knowledge do you offer that your competitor can’t necessarily offer?
Ask about the agency’s track record as well as the experience of the agent you are dealing with. What kind of support network, admin and marketing does the agency have? As for the agent – ask about experience in your market and with your specific property class.
Got a pressing question? Email email@example.com and we’ll be sure to assist you
Cavan is the general manager at HomeBid. The agency is part of a property economist consultancy, investment, and development business founded in 1977, and is the largest low commission estate agency in South Africa, currently selling over 50 homes a month, at a minimum commission of R17,500 plus Vat.
Cavan has been involved in the ‘art of selling’ since 2005, in 2014 he entered into the property playing field and in 2015 joined HomeBid. Cavan believes that he was drawn to HomeBid because he shares the same vision as founder, Neville Berkowitz, that HomeBid will revolutionise the way residential properties are bought and sold in South Africa.
“We pride ourselves on the fact that our clients can rely on our group’s over 40-year reputation for unbiased and independent advice to institutional investors and developers as well as to the man- in the street sellers and buyers.”