mandates in any formal sense of the word, are an almost unknown entity in the
South African property market – despite the fact that the concept is well
established in other developing countries.
have read the section on understanding mandates, then you will grasp the fact
that almost all mandates to seek a property for a buyer are “open” mandates and
that the buyer will skip from one agent to another as they please going through
lists of properties.
African property market functions primarily on a seller agency model – despite
experiencing the strongest buyers market in living memory. Buyers are never really
represented to the same level as sellers with a properly constructed and
executed sole mandate and according to a buying plan.
a buyer meets and agent, by referral from another client, from an advert, a
show house and so on. Mr Smith informs the agent that they are in the market
and are looking for a house with the characteristics of xyz.
asks the agent if they have anything available. At that point, a buyers mandate
has been given and it is an open buyers mandate.
responds to say that no, they do not have xyz property on their own listing but
will do the necessary homework and check what is available on the market. They
have now accepted the mandate and there is, albeit very loosely, a contractual
agreement in place.
now proceeds to contact their affiliates in the industry, check MLS listings,
browse adverts etc etc to see if any property matches the buyers criteria. In
addition, if they are doing there work properly, they will do a Comparative
Market Analysis on each to see if pricing is within market value. They will
also do suburb reviews, consider current trends etc etc, so that when they
advise the buyer, they can do so with confidence knowing they are giving the
best advise possible.
they will have contacted the seling agents to get some “inside” information
about the seller. How negotiable are they? Is the sale urgent, and so on.
begins the viewing process – and after numerous viewing and hours of
appointments, phone calls and research the buyer is ready to make a decision.
If the agent is lucky, the buyer end up taking one of the properties shown.
however, the buyer suddenly lets them know that they viewed another property
last night, with another agent and have decided to take that one. Not a very
pleasant experience for a professional agent who has given the buyer their all.
EFFORT AND PROFESSIONALISM
result of the above scenario, many agents work on an ad hoc basis with buyers
and do not give them 100% of what they could offer in terms of service and
knowledge. And justifiably so – they are not guaranteed any return on their
investment of time and money.
approach forces estate agents into working “at their own risk” for buyers –
constantly incurring costs without any payment security. This is why generally,
complaints about agents come from buyers and not sellers.
hesitant to commit when there is no reciprocal commitment from the buyers.
most buyers are just out there looking on their own, they in general are dealing
with sellers agents. And these agents have one priority – their seller.
Who in the
transaction is taking into consideration, the buyers needs and circumstances?
Who in the entire transaction will be acting in the buyers interests?
truly ethical and professional agents, this does not pose a major problem, as
they will ensure that the deal is a win win situation with no party being
ripped off. But what about the myriad of agents out there who perhaps are not
so ethical or are only concerned about commission.
conflict of interest type of situation arises, the buyer needs to know they
have someone on their side.
absence of a contractual relationship with a specific buyer's agent could not
only damage their position in the negotiations, but might cost them a lot of
money if they do not know the market as well as local estate agents.
We make it
a point to notify our buyers when we am showing them one of our own listings, so
that they are fully aware of the fact that we am also mandated to the seller –
this allows them at least the choice of getting someone else to act on their
behalf if they wish to do so.
improperly constructed business relationship very rarely flowers into a
lifelong informal business relationship – where the estate agent becomes the
buyer’s entrusted confidante in all matters relating to the property.
of almost distrust unfortunately is created with this loose relationship – with
at times vastly different experiences. The property buyer who “employs”
different informal buyer agents often creates confusion – as each buyer agent
will try to introduce the buyer first to his or her own mandates and only
after that to other agent’s mandates where he or she earns less commission.
buyer would end up working with an agent whose agency do not have a good
working relationship with other agencies due to their e.g. unfair commission
sharing policies, the buyer will not be introduced to all properties on the
EXCLUSIVE BUYING MANDATE
solution for both buyers in terms of being represented effectively and agent in
terms of security of earnings, is for buyers to appoint a Buying Agent by means
of an exclusive mandate.
reality will mean that the buyer agrees to appoint an agent to actively seek
and research properties on their behalf, but also that they will not view any other
properties without this agent. If the buyer therefore hears of or sees another
property they are interested in they will arrange all viewing through their mandated
benefits, other than those broad principles discussed above, are
as the buyer having access to expert advice purely for their benefit,
to make appointments and calls themselves etc etc. Your buyer mandate
will pledge absolute confidentiality to you are well as advise you
swiftly if you should seek legal advice. They will ensure the contract
suits you the buyer abd advise you on negotiation key points. Consider that there is no cost to the
buyer as the seller is paying the commission, and you have a package deal that makes sense to all parties involved.
if there is no written mandate in place, buyers would be wise to act as
if one is in place. PROPERTY NETWORK agents are fully trained to work
with buyers and can make your house hunting experience a pleasant
instead of a stressful one. All they ask in return for their dedication
to you, is loyalty. To understand more about using a buying agent go here.
Go back to Legal main page, Seller Section or Buyer Section