Many prospective sellers are confronted with an invitation by estate agents to grant them a sole mandate for the sale of their property. 9 out of 10 times the immediate reaction is to decline the offer due to a perception that a sole mandate is only a clever way for the estate agent to obtain exclusive rights to your property which in turn will result in your property not being effectively introduced to the market and decreasing your chances of a successful sale.

Looking closer at market realities and understanding the marketing approaches of estate agents shows that this perception by prospective sellers may be ill-conceived, especially if a sole mandate is granted to a reputable estate agency.

However, for a prospective seller to be comfortable in granting a sole mandate to an agency, it is important that the seller understands what is implied by a “sole mandate” as well as what the consequences of granting a sole mandate are.

Nature of a Sole Mandate

The Code of Conduct for estate agents states that no estate agent shall offer property for sale unless he is duly authorised thereto in terms of a mandate granted to him by the seller. An estate agent can act in terms of either an open mandate or a sole mandate.

An open mandate allows a seller to exercise his right to enter into contracts (to sell his property) with as many estate agencies as he pleases. Thus no exclusivity is afforded and the spoils go to the agency introducing the first successful buyer.

In terms of a sole mandate, the seller undertakes to appoint a sole estate agent to exclusively market his property for a specified period of time. In return the estate agent undertakes to devote the bulk of his time and resources to market the seller’s property, possibly including advertising and web listing space as part of the marketing strategy. Consensus exists in that the seller knows that he has awarded exclusivity to the agent and the agent understands that for the period of the mandate he must use the sole mandate to try and sell the property. Any breach of the mandate may result in an aggrieved party having a claim for specific performance and/or damages against the other.

Requirements for a Sole Mandate

The Code of Conduct requires that a sole mandate must be in writing, as opposed to an open mandate that may be granted verbally. The seller must sign the sole mandate and the expiry date of the mandate must be recorded in the agreement. The estate agent must furnish the seller with a copy of the mandate upon conclusion thereof.

The Code of Conduct for estate agents also protects sellers, by requiring that the estate agent must explain the meaning and consequences of the material provisions of the sole mandate to the seller. In particular, the estate agent must explain the legal implications should the seller during the currency of the sole mandate sell the property without the assistance of the estate agent or through the intervention of another estate agent.

What are the benefits to a seller of a Sole Mandate

A sole mandate excludes competing agencies that act as free riders in the market. A sole mandate, therefore, serves as incentive for the reputable estate agency to focus all its energy and resources on selling a property.

The estate agent should pitch a detailed marketing plan in his endeavour to procure a sole mandate. The prearranged and agreed marketing plan may have as a result, amongst other things:

• a faster sale;
• less inconvenience;
• security;
• accountability;
• avoid competing agents’ fee claims;  and
• a higher price being achieved.

To Summarize

There is considerable merit in considering the granting of a sole mandate to a reputable estate agent as such a mandate serves as incentive for the estate agency to focus its energy and resources on selling your property. Importantly, the choice between a sole mandate or open mandate or even a dual mandate between two estate agencies remains the privilege of the seller and should be carefully considered when commencing the sale of your property. Where a sole mandate is considered, careful scrutiny of the terms of the provided sole mandate agreement is important to ensure that such reflects the understanding between seller and agent.

Published by Van der Spuy & Partners, Paarl