MAndates & COMmission
Mandates
When I started in real estate few years ago we were taught that Sole mandates were by far the most beneficial for my clients. Although it made sense (for an agency ) I didn’t immediately grasp why this is the best option for the owners.
(Caveat: This is only applicable of you get a great hardworking agent)
Looking back now after Five years I can say with 100% certainty that ALL my “highest” offers were all received on my Sole mandates.
I have now reached the point in my career that I 99.9% work on Sole mandates.
Part of the reason is a family decision and I will explain it in detail below but there are two very specific reason why I know this is the best route for every homeowner (if you have a great hard working agent)
01
Competing
When there are various agents that are competing against each other, it is not about who brings the best offer, but more about who brings the FIRST offer that is acceptable to the owner.
Every agent is “flying blind” about the “other interest and by nature will try to get “their” offer accepted.
This leads to lower accepted offers.
02
Practical
If one agent is co-ordinating the process you won’t get five different agent contacting you at all hours to bring someone urgently (before the other agents bring theirs).
It is therefore a lot more organised.
I like to group my viewings together (30min apart to show buyers there other interest as well which leads to better offers)
03
Agent motivation
The third reason is more personal (and probably selfish).
When I was working on open mandates I was never 100% in the moment with my family. The means while I was at a braai I would constantly be thinking about how the other agent’s showhouse is doing.
The fact that an agent can do everything possible, work extremely hard and still lose out after months of work (because another agent got “lucky”) and not earn R1 is still the strangest concept to me.
I thrive when I know me an the owner is in a partnership, and this only happens on a sole mandate.
I know I have a very unique way of marketing my properties and when I sell a house , I am “all in.”
If you believe in open mandates then I am definitely not your guy,
But
If you believe in a partnership I can promise you excellence and if your house is sellable I will find the best offer out there
Riekert
Commission
A very important question to any seller would be to find out what exactly the commission rate would be but more importantly “what does it include”.
A lot of agencies try to avoid the subject but I prefer that talk about it in the beginning of the process so that my sellers know exactly what to expect.
Before signing any mandates based on Low commission have a look the agency’s recent listings and review the media and marketing effort.
I know I am a bit more expensive than the “PeP stores” of agencies but on all my properties our Higher offers (Because of superior media and marketing) more than makes up for the “perceived 1 or 2% “loss”
These are my commission rates. It's based on the type of mandate as well as the selling value of the property
The industry Commission rate is anywhere between 5.5%-7.5% (Excluding Vat) Depending on the property
The VAT portion (15% of the commission) is unfortunately payable to SARS.
The commission will also be influenced by the value of the property as well As the type of mandate that are signed.
Sole Mandates
Below 1M
1
%
1M - 2.5M
1
%
2.5M - 5M
1
%
5M PLUS
1
%
Other Mandates
Below 1M
1
%
1M - 2.5M
1
%
2.5M - 5M
1
%
5M PLUS
1
%
All Rates are Excluding VAT
The VAT portion (15% of the commission) is unfortunately payable to SARS.
Finally
One my specialities is getting the highest offers possible in the areas that I work in.
That means that although you might lose out on 1% or 2% because I am more expensive than a budget agency.
But the fact that I write offers at least 5-10% higher than other agents makes more than up for it.
In the end every property has a ceiling that you can sell it for, but you need to make sure that your agent can reach 100% of that ceiling.
You are now at Step 3 of the seller journey.
1. Before Listing
Seven things you MUST do BEFORE listing your house
2 Three secret ingredients
To get most money in your pocket we need these three ingredients
3. Mandates & Commision
Different mandates and commission models
4. Contracts
What does all the clauses in an OTP mean?
5. OTP Signed, now what?
Offer has been accepted, now what?