A number of contentious issues face the seller of a residential property — these include the choice of estate agent, the amount of selling commission to be agreed, and whether to sign a sole mandate, as opposed to a joint or an open mandate. In the latter situation, the seller invites a number of estate agencies to market the property.

There is often resistance to signing a sole mandate, with the seller feeling that the property can get much wider exposure if handled by a wide field of agents. Some people feel that estate agencies want sole mandates purely for their own benefit, to keep rivals out of the market and to ensure maximum possible return for the marketing effort and expense.

"That sort of perception is understandable," agrees Ronald Ennik, Pam Golding Properties’ Gauteng MD and the group’s chief operations officer. "But the reality is that a sole mandate is the best way to get a high price. If you look at all the homes for sale in the expensive suburbs, for example, you’ll see that the sole mandate way is uppermost."

Agents only paid for results
The philosophy is simple, explains Ennik. If you want to appoint someone to sell your property, you want that someone to be answerable.

"If an agent isn’t answerable to the seller the property in question can fall to the bottom of the priority list. Very little work is done on an open mandate. It's too risky for an agent to spend time going through buyers’ lists, canvassing potential buyers, liaising with colleagues — and persuading head office to spend money on expensive advertising and marketing.

"A good agent works a number of potential sources. The neighbourhood, for instance, is a good target area. So often people are ambassadors for the area in which they live. A good agent will leverage off this.

"But it becomes too nervewracking to spend this amount of time on open stock. Remember, an estate agent is not paid for time — only for results."

Competing inflates prices
Ennik says that another reason open mandates don’t work as well as sole mandates is that there is not the same degree of accurate price counseling.

"If there are half a dozen agents working on the same property nobody wants to be the bad news guy — so the seller tends to get inflated prices. A good agent will provide sellers with a valuation that reflects both the upper and lower parameters of the price which may be achieved for their home."

He adds that if a client chooses to put their home on the market at a higher price than suggested his agents will usually comply, but will also advise the client to test the market at a reduced level if there have not been any bites after six weeks.

"Sellers should beware not to compare the price of their home to the listed prices of other homes in the area which may have sold. They need to compare the realized prices achieved."

Mick Joyce, PGP’s Western Cape Metro region managing director, advises sellers: "Awarding a sole mandate to a reputable agency can help a seller achieve the highest possible price for his or her home, as it avoids the temptation for competing agents to undercut on price for the sake of closing the deal — in other words, let buyers compete for the sale, not agents."

Laurie Wener, director and area manager for the Cape Town City Bowl and Atlantic Seaboard, advises sellers to be extremely cautious about awarding mandates.

"It is common practice for sellers who favour an agent who gives them the highest valuation for their property, but this is not always the most accurate valuation. Sellers will then be disappointed when the market does not bite at the unusually high price and may find that their home stays on the market for a long time, with the price dropping continually."

To show or not?
Ronald Ennik makes the point that sellers, often critical of agents’ commissions — which are completely negotiable — should realise that they get a free service. The agent only earns if there is a sale.

"Perhaps the most important input is time — time organizing and manning showhouses; time bringing potential buyers to viewing appointments; time giving the seller feedback. It all adds up. Then there are capital costs — advertising in newspapers and magazines, websites, marketing plans, brochures, tapping the countrywide referral system — plus the post sales process, dealing with conveyancers, bond originators, paperwork etc."

The issue of show houses is another area of debate among sellers and real estate professionals. Pam Golding Properties official view is that showdays are one of the most effective ways of selling residential property — and an important facet of the company’s marketing plan.

Not only does a showday allow buyers to view a potential new home at their leisure, it reduces the inconvenience to the seller in that it potentially limits the number of appointments to view (often at inconvenient times) by agents with 'keen' buyers.


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