OPEN SELLING MANDATES

This is often no more than a verbal instruction to an agency to find a buyer without any further commitment on the seller's part. The open mandate liberates sellers from the need to sign any mandate documents, but is the least effective form of marketing.

Professional agents are reluctant to actively promote an open mandate property in terms of advertising and show days, because they know the door is always open for a competitor to step in with a buyer after all their hard work and promotional costs.

It appears attractive and non-committal, but agencies obviously don't like doing business like this. The most professional and successful sellers will brush aside open mandates. It's always a question of quid pro quo - value for value. If you are looking for a professional agent to deliver a professional service, the open mandate will probably not be favoured. Commitment is a two sided affair.
 
While some homeowners have had bad experiences with Sole Mandates, the problem was invariably not with the mandate, but with the agent they chose.

WHAT IS AN OPEN MANDATE?                                                                                                             To Top
 
An open mandate is simply the oral authorization a seller gives an agent to market a property. The real estate agent has the right to market the property on the terms the seller instructs.
 
With an open mandate the sellers have the right to appoint as many other real estate agents to market the property as they wish, or even to sell the property privately. Open mandate sellers usually appoint several agents to market their properties.
 
The seller also has the right to withdraw an open mandate at any time, for whatever reason. So, real estate agents with only an open mandate can be fired whenever the seller feels like it.
 
This is what is probably so appealing to most sellers about open mandates: They have the right to appoint as many real estate agents as they want and have the right to cancel the mandate whenever they feel like it. The idea obviously is getting replacement agents if the one chosen to work with in the beginning proves defective.

WHO DOES THE AGENT WORK FOR WITH AN OPEN MANDATE                                                           
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The agent works for the seller, even with an open mandate – not the buyer, although in practice this may not seem true.
 
The seller is the person that appoints the agent to market the property. The agent’s commission gets paid out of the purchase price for the property – the seller’s money. And the agent has an obligation to represent the best interests of the person who mandates him/her – the seller.
 
But in practice, some real estate agents forget who they work for. Maybe because they’re in such competition with other agents to sell the property that they see the goodwill of the buyers as their only edge over those other agents. Point is, if something goes wrong, who are you going to blame? If you have more than one agent, how are you going to keep track of what they do and say about your property sale?

OPEN MANDATES AND CONTROL                                                                                                        
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When several agents have an open mandate, it becomes almost impossible to control the marketing, viewing and confidentiality.
 
Who was it that advertised your property for R50 000 less than you instructed? Who was responsible for telling every Tom Dick and Harry about your need to sell quickly, despite your instructions not to?
 
“I don’t know. It wasn’t me!”
Who was it that first introduced the buyer to your property? Can you absolutely say that it was the same agent drawing up the contract? When you start asking the money questions, there suddenly might be more than one agent with their hands up! Who will you pay? Or will you end up paying both?
 
The loss of control due to lots and lots of open mandates can result in the seller being liable for paying double commission!
 
Unless you are prepared to keep a proper filing system and keep accurate track of all agent enquiries…. well the consequences speak for themselves.
 
OPEN MANDATE COMPETITION                                                                                                             
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Many sellers assume that more agents automatically mean more buyers – and a higher selling price as a result. But that’s not true. The truth is – buyers hunt houses, they don’t hunt agencies! Buyers are looking for a house that suits their needs. If your house is marketed correctly, the buyers will know about it and come to you.
 
The property and the facts about the property is what gets buyers interested enough to make an offer. If the property fits the buyer’s needs, and the price is right, the property is as good as sold. Question is, if you have committed to nobody, has anybody committed to you? Who is going to spend time, money and effort id implementing a marketing plan so buyers know your home is available?
 
The fact that a thousand real estate agencies have a right to market your property is not going to interest potential buyers. The only possible advantage of having more real estate agents marketing the property might be that the advertising exposure may be more than with a single company. But not always, simply because most agencies will not spend money on extensively advertising an open mandate!
 
Other than advertising, some agencies will not even have a show house, or even place a for sale sign in front of an open mandate house. Those actions might attract buyers, granted, but it will definitely attract the competition! The agent with an open mandate is forced to try and keep the property a secret as long as possible, to try and find a suitable buyer before some other agent gets the listing.
 

Agents only get paid for a successful sale. So, when several agents market the same property, they are competing to find the first offer that the seller accepts. They are not looking for the best offer, just the first one. An unscrupulous agent might even pressure the seller into accepting a poor offer! This is called the “hard sell”.
 
OPEN MANDATE OVER EXPOSURE                                                                                                 
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If you grant many open mandates, the agents will show your property to every buyer they have.
This sounds great, doesn’t it? Most people get excited about this. But actually, this means that buyers who are looking for a totally different kind of property, or worse, buyers who can’t afford to buy, get dragged to your house on the off-chance that they might be interested in making an offer.
 
Those buyers who are looking for something totally different reject your property immediately, because it’s not suitable, or simply because they get ticked-off with an agent who drags them to places they don’t want to see! And once a buyer rejects a property, they don’t come back later.
 
Those buyers that cannot afford your asking price will also either reject your house immediately because it is too expensive, or make low-ball offers – the only offers they can afford to make – in the hope that you’re getting tired and they get lucky. Your open mandate agent now comes and tries his/her best to try and sell those low offers to you, with convincing “evidence” that you are overpriced. And you can’t really blame the agent – remember, he/she only gets paid if they’re the one that gets your signature on a contract of sale! The inter-agent open mandate competition works AGAINST you.
 
If several agencies have for sale signs on your lawn, your property appears in every second agency’s newspaper ad, and hordes of unsuitable buyers have traipsed through your home and rejected it, it is in danger of getting “over exposed”. This is just a nice way to say that you may seem desperate to sell. And seeming desperate is never good for your sale – even if your are.
 

If loads of potential buyers have come to view your house, and nobody bothered to buy it, does that mean something is wrong with it? If you could start thinking like that, how can buyers not think it? And if something is wrong with the house, and everybody’s already rejected the house, then you must be desperate to sell, right? Also consider that most good sales take place within 4 weeks of listing – after that interest and value diminishes.
 
You want, in the first attempt at selling, commitment, professionalism and extensive marketing – or pay the price.

OPEN MANDATES AND YOUR SANITY                                                                                          
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So, now you know that open mandates mean more work for you – keeping track of the agents’ activities and tracking all visitors by agent. Already enough to stress you. But subconsciously, there are other issues which impact on your mental health and can add unnecessary strain to your selling process.
 
You’ll never feel comfortable about accepting an offer at lower than your asking price, even if it is the best offer you’ll get, because you won’t know what the other agents are busy with.
 
If several agents are competing and you don’t have firm control over each agent’s progress in selling your house, a much better offer might come around in the hands of another agent, at the exact time you are getting bamboozled into signing a poor one by this agent! You’ll always wonder… should I wait, should I phone all the other agents out there. Sad, but true! Open mandates will make you paranoid.

LAST WORD ON OPEN MANDATES                                                                                                
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A well known truism says,, “An open mandate makes your house everyone’s listing, but nobody’s responsibility but your own.”
 
Essentially, you will take responsibility and still be paying commissions.
 
This all being said, Open Mandates have worked for some people and can still work under certain circumstances. Those people however are few and far between and the circumstances not definable.


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