A question often raised by home sellers is whether or not to choose to grant an exclusive mandate to a real estate agency.
Explains Dr Andrew Golding, chief executive of the Pam Golding Property group : “A question often asked is, is it not better to award an open mandate to several agencies to ensure maximum exposure to potential buyers?
There are a number of issues to consider when dealing with this question, the first of which is in regard to the property itself. The first important consideration is that properties on the market at any given time are in ‘competition’ for attention from the buyers in the market at that particular time.
Secondly, provided the seller is serious about selling the property, the best time for that property to attract the right buyer/s and sell is when it is freshly exposed to the market, and for a reasonably short period of time – preferably less than three months. After this period of time, the property from a marketing perspective can become ‘stale’ in the eyes of buyers, who take note that it remains unsold and draw their own conclusions as to why.
The longer the property stays on the market – which is further impacted if the property is over-priced – invariably results in the market rejecting the initial listing price and ultimately either receiving offers potentially significantly lower than would have been achieved if correctly priced at listing, or receiving no offers at all.
Another aspect to consider is that in South Africa, agents work on commission only, which means they need to spend time, energy and money in managing the marketing and sale of the property – which can be extensive, without any guarantee of a return on this investment. It is logical therefore that an agent who is given the security of an exclusive mandate will maximise their input of time, energy and financial investment without the threat of all their efforts coming to naught due to the property being sold by a competing agent. In fact, it is unlikely that much time or marketing investment will be spent on a property without this, as the risk to the agent then escalates substantially.
As it is evident that astute and targeted marketing is a critical component of the successful conclusion of the real estate transaction, it follows that a seller is best advised to award an exclusive mandate to an area specialist from an experienced and professional agency that can offer a strategic and effective marketing plan, which then translates into enhanced visibility for the property.
Marketing is critical in a slow market, and without strategic marketing, sellers may find it difficult to sell their homes at the best, market-related price. In more challenging economic times exclusive mandates become even more important as they hold agents accountable.
Sellers should be guided by a knowledgeable and trustworthy agent with a solid track record who has been trading successfully for some time and is an area specialist who fully understands the specific nuances of the market. A professional agent with solid negotiation skills backed by facts and integrity will know how to react and operate in markets where houses for sale are in high demand or over-supply.
Apart from a professional marketing plan, a successful real estate transaction relies on far more than simply the number of buyers in the market – it also needs an insightful pricing strategy and an intelligent buyer strategy. This is a multi-faceted process that needs to be managed consistently, carefully, and strategically in order to achieve the desired result – a successful sale at the right price and in a reasonable time frame.
This can range from weeks in a high-density metropolitan area where there is more demand, up to several months and even a year for very high-end iconic homes. It also depends on the seller’s needs and the urgency of the sale.
Open mandates do not allow the seller to benefit from a focussed and co-ordinated marketing effort, and they can create confusion in the market with the same property advertised in the online space but with conflicting photographs, prices and details. It is certainly more beneficial to the seller to have buyers competing to offer the best market-related price than to have agents competing to close the deal at any cost, often to the detriment of the seller’s price.
Bear in mind that buyers are savvy and will be quick to pick up signals of confusion and dilution of the property’s impact in the marketplace as a result of the somewhat haphazard marketing that generally surrounds open mandates.
Added to this, the seller will also need to manage all introductions to the property under an open mandate to avoid a potential claim for double commission where agents contest the introduction of the buyer to the property.
In a nutshell, the value that a seller achieves on a property sale is directly influenced by the real estate service that goes into it, and this service is maximised through an exclusive mandate.
It is also important that sellers are provided with comparative market analyses so that they can participate in the conversations around correct pricing, and make informed decisions. The closer that the property is listed to current market value based on actual recent sales, the quicker the property will sell.
Choose an agent that you are comfortable with and can trust, and whom you feel can obtain the best price in the prevailing market conditions. Be wary if an agent is way out in valuation, either above or below. In the current market, a listing price review should be conducted within a week or two of going to market,” concludes Dr Golding.
All comments above by Dr Andrew Golding, chief executive of the Pam Golding Property group