You have had it with lazy real estate agents, poor marketing, dropping your asking price and the waiting - oooh, the bloody waiting! You've had your house on the market for 5 months already and the number of prospective buyers that good-for-nothing real estate agent has traipsed through your house can be counted on one hand - with a few missing fingers!
So, after months of waiting - oooh, the waiting - your brother offers to "help you out" and buy your problem house, if you would be willing to accept a hundred thousand (or so) less than what you hoped to get. You cave, go to his attorney and sign the contract - Christmas is coming, after all!
You feel relieved, light, and a couple of decades younger - until you get a call from the conveyancers: They have received a claim for commission from the good-for-nothing real estate agent!
You can feel your arteries clogging up and the vein on your temple inflate and deflate like an angry, breathing bull-frog.
"You bastard! You didn't sell my house! You did just about nothing to get it sold! And now you want me to pay you R60 000 in commission?! I ought-ta..."
"Well, you signed my exclusive mandate! Right here, in the fine print, it says that the commission is payable to the agent (me), no matter who sells the house during the mandate period."
And he smiles! The oily, rotten, dog-butt, chicken-faced, real-estate-agent SMILES!
Oh, sorry! My mistake! That isn't you - yet...
How to control your mandate
Before granting a mandate, be aware of the different mandates and know what you are signing. Yes, read the thing, like your mother told you. Chances are that you won't be happy with what you see. In fact, you might not be happy with a LOT of what you see!
So, get a note pad and take down notes of the things you don't like about the mandate. Don't get angry! Don't get scared! You can change it. No, really - you can change it!
But you'll have to change it BEFORE you sign. A mandate is a contract. It is binding. It is enforceable. And it cannot be cancelled, unless you make dead sure that the back door is unlocked yourself.
Here's a sample of a selling mandate with a lot of the terms and conditions commonly found in mandate documents used by South African real estate agents, if you don't have one of your own. Don't believe me? Then take a look at some of these:
(I thought I would be able to find a lot more examples of mandate documents on the internet. But I guess some real estate agencies are a bit shy about their mandates.)
Don't get angry
Don't get angry with the real estate agent. The printed mandate he/she handed you is a pre-printed form. They get it like that from the real estate agency. And the principals of the real estate agency probably copied it from some other real estate agency's mandate. Okay, maybe not...
Don't be angry at the real estate agent who handed you the mandate form. The South African home sellers should be angry at themselves. Real estate agents have been getting away with one-sided seller mandates for so long, it's not even funny. And it is the consumer's fault.
Yes, it is OUR fault! We have slowly but surely allowed real estate agents to get so used to claiming all those "rights" you see in that there mandate document by agreeing to them without protesting. We have enabled them to "cheat" us by cheating ourselves.
Don't get scared
Don't get scared of mandates. A "mandate" is just an http://www.answers.com/mandate&r=67 "an authoritative command or instruction". A mandate can be granted by simply saying the word "yes".
Mandate is not a dirty word - in fact, you really, really want a written mandate if you are going to appoint a real estate agent. A written mandate protects you, as the seller, by stipulating clearly what is expected of you and your agent.
You need a mandate. So don't run away just yet...
Don't run away
Your mandate with your agent is the thing that tells both parties exactly what is expected of them. You want your agent to know what you want him/her to do, don't you?
The mandate clearly records the asking price for the property. The agent is not allowed to market your property at a different price. And you will also have a reminder of what your price expectation was at the start of the sales process.
The mandate clearly states how much commission you are willing to pay for the agent's services. The agent knows how much he/she can expect to earn for a job well done. And you have a reminder of how good a negotiator your agent really is!
A sole and/or exclusive mandate protects you, as the seller, against the possibility of a double commission claim. You only appoint one agency to sell your property, so there cannot be another agent appearing from the mists to claim additional commission.
A mandate that protects your interests and the agent's interests equally will motivate the agent to work hard for you. The agent has a "guarantee" that his/her hard work will bear fruit and that the sweet,sweet commission will not be snatched away before his/her nose by another agent that just got lucky.
Don't get scared by mandates. The really scary things breed where there is no written mandate...
You can change it
You heard right. You don't have to accept any terms and conditions you don't agree with in a mandate document. It is a contract just like an offer to purchase property. It is open to negotiation - before you sign. You wouldn't just accept a bad offer to purchase your house, would you? So, why would you accept a bad offer of representation?
Take a pen and cross out everything you do not agree with. And/or add some terms and conditions of your own to the document. Make the mandate suit your needs.
If you're not sure how an exclusive seller's agent mandate should look, you can use this one as a crib note, or replace the original totally!
Sign it. Now you just have to convince the agent!
Negotiating a fair mandate
The agent will probably not be happy with the changes you made to the mandate document. You just took away a big chunk of the "guarantee" the agency has worked into the mandate.
The agent might mention the words "can't", "won't" or "not possible". But you know that anything is possible where real estate is concerned. So stick to your guns.
Negotiate. This is an ideal opportunity to put your agent through his/her paces. If they cannot negotiate a mandate, how will they fare negotiating a sale? But remember: Your agent is at a disadvantage here. You have something he/she wants, instead of him/her having something a buyer wants. And your agent never expected you to read the bloody mandate. Much less changing the thing!
- An objection to removing the clause stating that the agent would be entitled to commission if, after the mandate expires, you sell to a buyer introduced during the mandate period can be be addressed with:
"{Agent's first name}, I like you! I want you to sell my property. I am confident that the marketing plan we knocked out will be successful. Are you having doubts already?" - Round two, if the agent is tougher than you thought:
"{Agent's first name}, if you do an exemplary job of marketing the property and, by some stroke of horribly bad luck, we don't get the property sold, what reason would I have not to extend the mandate period? {pause} But let's not grab for the umbrellas just yet! {touch wood}" - If this doesn't work in the second round, go for logic:
"Mr / Mrs / Miss {Agent's last name}, we have agreed on the asking price together, and you have done an impressive comparative market analysis. The only way this house might not sell within the mandate period would be if we were both mistaken about the value the market will see in the property. If I have to sell at a discount after the mandate period, you wouldn't be so arrogant as to claim to be the cause of the sale, would you?" - If the agent objects to the cancellation provision in the mandate, you can counter with this:
"{Agent's first name}, you are going to do your best to sell my property, aren't you? {Allow the agent to answer in the affirmative} Then why are you so worried about being fired?!" - And here's the clincher for your mandate negotiations, if delivered correctly:
"Mr / Mrs / Miss Agent, this is what I require from an exclusive seller's agent mandate. {pause} I have laid it in front of you, signed and sealed. You have to decide if you can live with a fair seller's mandate, or if you can live with turning down a good client."
Remember that you don't want to beat your agent into the ground and leave him/her for dead. So, be sure to leave some space in your mandate period and commission offer to be able to "give" a little in the negotiations. I suggest you allow up to 25% of "give" in your original offer.
You want the agent to leave feeling good about the mandate. He/she still has to sell your house, remember!
A happy agent works harder. And a hard working agent sells real estate.
The agent might not agree to your mandate
Even after all your effort, the agent might refuse to accept your ideal mandate. And it is the agent's right to refuse your listing. If this happens, it will be your turn to decide if you can live with the consequences of signing a very one-sided mandate, or if you can live with the services of another real estate agent.
