An Exclusive Mandate is one of the most common ways to sell properties. It means that a single agent represents the seller and receives all the commission. The house hunter gets free service for finding their dream home. This is advantageous for both seller and buyer.
But what exactly are Mandates?
Mandates in real estate are agreements between two parties to sell a property. In exchange for selling the property, the agent receives a commission from the seller or buyer.
Open Mandate Vs. Exclusive Mandate
In the case of the Exclusive Mandate, both agent and client sign an agreement that forbids them to use other agents’ services in a certain time frame. It is very often signed when a house is newly built, and there is no information about how it has been marketed before.
In the case of Open Mandate, exclusive rights last only for a fixed period of time – when that timeframe runs out, clients can give their business to another agent. There may even be several open mandates at once for one property, but each will have its own end date.
The Exclusive Mandate gives the seller right of refusal – no other agents can show or market his property, but he may still accept an offer directly from a house hunter. By doing so, he is obligated to pay commission. This means that potential buyers willing to make lower offers on the property cannot do it through another agent.
Suppose there are several buyers interested in buying the same property. In that case, the agent will negotiate who gets first priority and thus have better chances of dealing with any negotiations more successfully. If two individuals want to buy the same house at once, the buyer preferred by the agent has first priority. This shows how valuable the professional opinion of real estate agents can be for clients looking for their dream home. It does not mean that Open Mandate is worse than an Exclusive Mandate. It means that both of them have advantages and disadvantages.
Both Open & Exclusive Mandates can be used to sell residential or commercial properties, but Exclusive Mandate is most popular for selling homes.
The Advantage of a Single Agent in Selling a Property
Single agents make an argument in favor of using this type of mandate in real estate since what you need when selling a property is to get it sold quickly and without any extra hassle or costs involved. When trying to sell your home, the last thing you want is to have two agents fighting over commissions. In the end, it will cost you more money rather than help the sale along smoothly.
And if there are several buyers interested in purchasing the same property, the exclusive agent can choose the most suitable buyer. By representing your interests, the agent gets to know the property better than any house hunter who is not actually living there. And they are able to use this knowledge when dealing with negotiations or to create marketing materials for your property.
The Agency Agreement has to be signed by the seller in front of a notary public or at least two witnesses ( not necessarily real estate agents ).
So folks that’s pretty much an overview on Exclusive Mandate Sales.