Ricochet News

The dangers of open mandates

Jul 7, 2017
The dangers of open mandates

There’s an old saying about how unwise it is to change horses in midstream, and it certainly applies when you are trying to sell your home and have already awarded a sole mandate to a top agent.

“Once you have decided to sell, it is only natural to want to find a buyer and ‘get across the river’ as fast as possible,” says Berry Everitt, CEO of the Chas Everitt International property group. “But one of the worst moves you can make to try to speed things up is to switch from that sole mandate to an open mandate, in the belief that that several agents working simultaneously will reach more potential buyers than one working alone.

“The fact is that more is definitely not merrier when it comes to home sales – and that making a change like this is actually likely to lengthen the time that your property will stay on the market rather than shorten it.”

For a start, he says, much of the marketing done by the original sole agent and the momentum gained from that will probably go to waste as the other agents each start from scratch to build up interest in the property.

“In addition, agents working on an open mandate seldom have the same level of dedication to marketing your property as an agent working on a sole mandate, because of the risk that the deal will be done by someone else and that any time and money that they have put in will go to waste.”

Writing in the latest Property Signposts newsletter, Everitt says sellers should also be aware that buyers who see many for-sale boards on a property will often “shop around” among those agents until they find the one that quotes the lowest price or agrees to present the lowest offer.

“Meanwhile a longer time on the market will also mean an increase in your holding costs, as well as a real risk of the property becoming overexposed and buyers losing interest altogether.

“And then to top it all, changing from a sole mandate to an open mandate increases the risk that you will be exposed to a ‘double commission’ claim that could severely affect the profitability of your sale. Such claims can easily arise when the eventual buyer of a property has viewed it with one agent and concluded the sale through another, but won’t happen if you award a sole mandate to a qualified, experienced agent and stick with it.”