SOLE MANDATES – IS THIS THE BETTER OPTION?

One of the first steps when selling your home is to consider giving an Estate Agent a Sole Mandate; but it is essential to be informed before doing so. Sellers are completely within their rights to ask their Estate Agent to explain the pro’s and cons of selling their home on a Sole Mandate, Open Mandate or through a multiple-listing service.

Essentially there are three type of mandates; Sole Mandates, Open mandates, and Multi-listings. A Sole Mandate, once signed, is a contract between you and the Estate Agency and you cannot simply change your mind about its provisions later and revoke it.

THE SOLE MANDATE

The Sole Mandate is a legally binding contract entered into by the Seller and the Estate Agent. It gives the Agent the legal right to be the only marketer of the property over a certain period of time and at a price agreed to by the Seller and the Agent. If Agents are sincere in their determination to sell a property, then there are many obvious benefits which accrue to Sellers willing to sign a SOLE SELLING MANDATE.

The Sole Mandate system is the most popular in the South African market. It has long tradition within the industry, which has allowed professional Estate Agents to perfect the accompanying marketing plans, ensuring that the marketing of the property receives their full attention and commitment. Selling by Sole Mandate ensures the most possible privacy and least amount of inconvenience to Sellers, and also protects them from double commission claims. This form of marketing is, however, most effective when embraced by well-established Estate Agencies that have strong market penetration in the area in which the property is situated, and whose budgets allow for extensive media advertising.

The choice of whether to go with the Sole Mandate is entirely the choice of the Seller. No Estate Agency can force you to provide it with a Sole Mandate. Naturally Estate Agencies prefer Sole Mandates because of the exclusive rights they have that justifies the effort and costs they put into marketing the property.

They have to offer you exceptional services. They must advertise your home in the appropriate publications as well as on the Internet, with ‘For Sale’ boards outside the property (if the local municipality allows it), and a Show House must be held at least once a month, throughout the mandate period.

It is sensible to give a Sole Mandate for a period of four months. Beware of mandates that add a clause stating the mandate will continue indefinitely beyond expiry date, unless you cancel in writing.

THE OPEN MANDATE

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 costs 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 the best choice.

OTHER BENEFITS OF SIGNING A SOLE MANDATE AGREEMENT

It is important to look at the marketing process that the Estate Agent will follow before you sign a Sole Mandate agreement. Ten different, smaller ads will reach more potential buyers than one big ad. The size of the advertisement is not important. Do your homework and obtain references from other Sellers. Decide what price you want to ask for your house. Do not just go with an Agent, because he said that he/she could get you a higher price. Always remember that you determine the price at which you wish your home to be marketed but that you appoint an Agent to do marketing for you.

There are no negatives to signing a Sole Mandate agreement if both parties involved are honest people. It is also important that both parties must come to an agreement on what their expectations from one another are. Quite often, the Seller simply takes some items for granted. It is therefore important that the marketing process forms part of the agreement with your Estate Agent, and this agreement needs to be signed by all parties.

A Sole Mandate is the only evidence the Agent has that the Seller will pay him for his expertise and services. Sellers tend to forget that Agents need to spend money on advertisements etc. to sell the property. If you order a pool, you sign the contract first – no contractor will install a pool and enter into a contractual agreement after the pool has been installed.

Some important aspects that will influence the sale and that a Seller can rely on:

• the Estate Agent will advertise your property on a weekly basis in news papers.
• your property will host a show house every second week until your property is sold;
• a full colour pamphlet will be designed with professional photographs and text to be handed out during the Sole Mandate period;
• your home will be advertised around the globe on the internet;
• you will receive exclusive exposure if you advertise your home with one Estate Agency
• benefit the end result in price if one Estate Agent controls all incoming offers;

The same rules applies when it comes to the Sole Mandate agreement – by signing one, you give permission to the Agent to bring prospective buyers to your home on a daily basis. You confirm that you agree to the terms of the sales process. A Sole Mandate is simply a business agreement – it is a legal document that spells out an agreement between two people. Our law system has look into the Sole Mandate agreement and has implemented clauses that protect both parties. The only thing you need to do is to appoint the right Agent for the job. Of course, in our current times, security is an important factor and this is aided by a mandate with a Sole Agent.

SELLER BENEFITS

There are many good reasons for the Seller to sign a Sole Mandate. We know that Sellers want the most money for their property with the least amount of problems. By dealing with one Agent this can be achieved. It is a fallacy that many Agents will do a better job than one Agent can. All buyers interested in the Seller’s property are funneled through to one Agent who can negotiate with each one and thus obtain the best price.

Conversely, when the property is given to three Agents with different buyers, each Agent is working in isolation. Their interest becomes getting their buyer’s offer accepted first, at any price. The Estate Agent is then working for the buyer because if his/her buyer doesn’t buy, the Agent does not get paid. Pressure is exerted on the Seller to accept the offer being presented, because if that buyer does not get the property another Agent’s buyer will. Buyers perceive the property being offered through one company and not eight or ten as more exclusive. They will feel more secure in knowing that one person is controlling al interested buyers.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Then build up to your dream home.

Most people who are shopping for a home have something specific in mind, but often what they can afford to buy doesn’t match the mental picture.

When looking around for a home these days, buyers often have to make some kind of compromise between price and the home’s features. We would all love to be able to buy our dream home, or even build it from scratch so that it suits our requirements perfectly. However, many are not in the financial position to do this.

Bearing the current mortgage market conditions and affordability factors in mind, coupled with the fact that the interest rates are set to increase this year, possibly even sooner than many think, the best place to start is to buy small and then build up to your dream home.

While now is a good time for buyers to get into the property market, they have to be realistic about what their money can buy. Although first time buyers may not be able to start out in their dream home, they can still enjoy the benefits of homeownership in a more affordable starter home.

Accommodation requirements change over time, and therefore, young couples or up-and-coming executives or any first time buyer for that matter should not be afraid to start off with a modest home or apartment that will serve their needs well for a few years as well as fit into their budget.

The best place to start paring down the must-have features is to make a list of all the features you would want in your dream home like a home theatre, swimming pool or large entertainment area, for example. Keep that list to work towards in the future and make a separate list of all the features you feel you could not live without like a certain number of bedrooms, security etc.

While the features you cannot live without may not be conducive to a space that is, for example, ideal for large-scale entertaining, remember that a starter home or apartment will come at a much smaller price tag. Added to this, after a few years, you will have acquired some equity in the home, making it easier for you to move up to a bigger, more accommodating space when you sell. In addition, the less money a buyer spends on a home now, the smaller the deposit that will be required for payment upfront.

While buyers may need to be negotiable on certain features of a property in order to accommodate their budget, here are some pointers that can minimise the discrepancy between dream home and starter home and help buyers fast-track their dream home purchase:

1. Start saving for the deposit before you start shopping for a home

The more you have saved up as a deposit, the better your chances of getting a good finance deal

2. First buy a small house with a lower bond

Your first house probably won’t be your dream house, but it can be a good place to start working towards it.

3. Save extra money for other home expenses

Buyers would be wise to have a little savings to draw on to help them pay for items such as new paint, additional furniture and any maintenance or repair work that needs to be done. Ideally buyers should have approximately 5% of the value of the house saved for these costs.

4. Be ready for the worst case scenario

Prepare yourself financially for any worst case scenario. For example, with interest rates set to increase, budget for around 2% increase over the next couple of years and build your financial plan around that number. If things turn out better, you’ll be ahead of the game.

5. Pay off your bond as quickly as possible

It would be ideal for buyers to budget for larger repayments than the minimum required on their bond each month or to pay in lump sums as and when they receive bonuses and the like. Paying off your bond faster can reduce the amount of interest you pay, and if you hit hard times, you will have paid in enough to be able to negotiate terms with your financial institution.

In the current market, buyer affordability is all about working smartly with your money and building up your resources to enable you to afford that dream home.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za