Caveat venditor – seller, protect yourself against hidden

agendas

Before committing to an exclusive sole mandate with an estate agent, sellers need to
clarify under what “office rules” the agent’s marketing program for the mandated
property will be conducted – clearing the table of any hidden agendas which will be
to the seller’s detriment. It is recommended that the sole mandate should be geared
towards including all the estate agents in the local property market and not towards
reducing the exposure of the seller’s home to would be buyers from competing
estate agencies or agents. A properly constructed sole mandate can hone the
combined marketing force of all the estate agents in the area where your property is
located – a force whose “circle of influence or contact base” is contrary to popular
belief responsible for more than ¾ of all property transactions by estate agents.

Sellers too often only negotiate the sales commission and leave the “nitty gritty” of
the marketing plan in the experienced hands of the agent – lulled by either his or her
recent sales success or the impressive national presence of the agent’s company. In
a strong buyers market the most important item on the seller’s agenda should be to
negotiate with his or her prospective sole mandate agent an inclusive marketing
program.

The very high levels of competition for business in the property industry encourages
a strategy of “indirect exclusion” by especially dependent estate agents - i.e.
agents whose marketing efforts are orchestrated by management or agency owners
who funds the agents marketing costs in exchange for 50 or 40% of the sales
commission. The estate agent is obliged to operate with a hidden agenda under a set
of written or unwritten office or company rules geared at excluding other estate
agents from marketing the mandated property for either a certain period of time,
or for a disproportional share of the sales commission. Justification for such
exclusionary practices are laid in front of the doors of “high marketing cost” or
“creating a fair change to recuperate cost”.

A seller therefore unknowingly contracts not only the estate agent but also a set of
“office rules” which discourages a co-operative spirit among competing estate
agencies, effectively preventing the mandated agent to put their client’s interests
first. By discouraging working together with other established professionals,
marketing programs under such office rules act as a double jagged sword by:

1. physically preventing other estate agents to introduce their buyers to the

seller’s property for a certain period of time – sometimes even agents
belonging to the same office as the mandated agent!
 2. creating an reaction of avoidance of the sellers property by the other
estate agents who know that there is a good chance their buyers will not
be reached by the mandated agents marketing effort. Only about 13% of
all buyers are finding a home via the media or the agents office -
newspapers advertisements (+-4,5% ), estate agency offices (+-3%) &
the internet (+-5,5% ). As indicated above, more than 75% of all buyers
are introduced to the property via the circle of influence of the
experienced estate agents. These buyers are either regular or previous
clients or clients referred to the agent by his personal contact basis.
3. discouraging other agents to market the property due to unfair
commission sharing structures. Sellers should ensure via the sole
mandate agreement, that the mandated agent will share commission only
on a 50/50 commission split with other agents, and not on a 60/40 or
70/30 basis. By allowing such an unfair commission split, sellers are losing
those buyers whose agents are not prepared to work for an effective
commission income of +- 15% (or less) – as the agent who introduce the
buyer to the house has to pay not only half of his commission to his office,
but most of the time also a listing fees to other agents who has listed the
property in the office.

A commitment towards the pro-active introduction of sole mandates to the other

competing agencies in the area via “open houses” within the first 2 weeks of
marketing the property by the sole mandate agent, will dramatically improve the
reach and effectiveness of the marketing program. A commitment to this ethical way
of marketing property has contributed to the meteoric rise of Cape Coastal Homes
to the largest estate agency (160% growth in agents) in the highly competitive
Helderberg market within the last 2 years. This concept ensures that homes listed as
sole mandates with Cape Coastal Homes, usually within hours of listing, are shared
with fellow associates and competitors, thus opening up the sellers’ interests to the
widest possible net of buyers.

A further positive feature of this “open door marketing program” is that it stimulates
agents to be more service driven, while at the same time creating a level of trust
between the seller & mandated agent beyond the norm in the industry.