Many people don’t fully understand the necessity for a signed mandate – it is an essential document that protects both the interest of you, the client and the agency marketing your home. Without a signed mandate, no professional agent will run the risk of marketing your property at considerable expense if there is a chance you will suddenly award the sale of your property to a competing agency. Furthermore, a mandate protects you by ensuring you get the level of service that you require on the sale of your property.
In terms of the Code of Conduct of the Estate Agents Board an authority to sell is required in writing from the registered owner/s.
One agency is awarded the property to market and behalf of the Seller. On successful conclusion of the sale, that agency is remunerated.
Two agencies are awarded the property to market and sell on behalf of the Seller. The agencies involved agree on a split (eg. 70/30) and then the Selling agent gets 70% of the commission and the other agent 30% for his efforts and expenses.
The seller allows as many agencies as they wish to market and sell the property. The agent who sells the property gets remunerated.
On a sole mandate, a Seller can request that the Agent:
- MINI-LISTS: A few agents in the area are included in the mandate to market and if one of them sells it the agents split the commission on a 50/50 basis.
- MULTI-LISTS: All the agents belonging to the multi-listing system (50+) are invited to a 20 minute open hour in which they list the property and market if they want to. Commission is also split 50/50 should one of them sell the property.
Costs Involved for the Seller
Between 5-7 % plus VAT, as agreed upon in the mandate. The attorney deducts the commission from the sale price on date of registration and pays balance to seller.
Penalty Bond Interest:
If 3 month’s written notice is not given to bank to cancel seller’s bond. It equates to approximately a bond installment for each completed month of notice not given.
Bond Cancellation Fee:
If property is/was bonded:
Applies even if the bond has a nil balance (between R2000/R2500)
Rates and Services:
All outstanding amounts needs to be cleared as well as an estimate of approximately 3 month’s rates paid in advance to the attorneys, upon their request.
Where applicable, any levy amounts owing to a body corporate or home owner’s association.
- Gas (if applicable)
- Electrical fence certificate (if applicable)
The cost is approximately R450 per inspection.
Repairs needed will be billed additionally by the service provider. Many have the option of not paying upfront, but the settlement by the attorneys on transfer, which is then deducted from the seller’s proceeds of sale.
Certified copy of Title Deed
If original is misplaced – cost is approximately R1000. If property is bonded, it is with the financial institution.
Any other repairs agreed to in the sale agreement
PLEASE NOTE: Even though the seller instructs the conveyancer to attend to the transfer, the purchaser is liable for the transfer costs.
What rights do I have to demand from brokers in an open agency situation?
From one agent you have the right to demand full and dedicated service. From several brokers you have no right to expect anything. Put yourself in their position – will you give 100 % service without having any guarantee that you will be paid for it? Why not get the kind of service that is most likely to result in a sale? When several companies are advertising the identical property, the inevitable result, unless an early sale is effected, is that service wanes in direct proportion to the time the listing has been in the books. No agency can afford to promote all its general listings consistently, and the service offered to all these sellers fall off. These properties inevitably take longer to sell. The agent’s attention continually keeps turning to newer listings that come to hand.
Another disadvantage of an open agency is the security aspect. When many agents have access to your home and you experience losses due to doors not being locked or not enough details of buyers viewing your home, nobody will accept responsibility. With one agent he/she must take full responsibility.
Is it true that on an open agency my home may be “over-exposed” and my chance of obtaining my highest possible price is diminished?
Can you expect a broker to try to get you the best possible price for your property knowing that a dozen others are offering it also? No, he will do what you have forced him to do, sell it if he can, at the price the purchasers offer. If he does not, one of the others will, and he knows it.
A competent and self-respecting agent would rather list ten properties exclusively than one hundred in the old slipshod manner. If you are one of the ten rather than one of the one hundred, your agent gets the opportunity of focusing all his marketing on fewer properties, which will be under his exclusive control for at least two months. He/she can plan an effective promotional program, and ensure a higher level of seller servicing. A good sale generally results more quickly.
On an exclusive mandate, will I capture all the buyers in the market?
Some owners fear that an exclusive agency may prevent them from selling their property through some other source. This is a mistake. With the amount of exposure a reliable agency will give you (make sure you get the promises guaranteed in writing) the real buyers will get to see your home. Any conscientious exclusive agent is willing to serve his client’s best interests by showing the property to another broker’s client, at an agreed referral fee, should this particular buyer not be on the exclusive agent’s books.
It is not advisable that the other broker takes the buyer through the home, since he/she doesn’t know the finer details of the property, doesn’t have the relationship or loyalty towards the seller which is very important in the final negotiations.
Many sellers still believe that by listing with many agencies, they will enjoy a multiplier effect on service. But this has been proven not to be the case. The seller is far better off having a thorough job done by one live, wide-awake firm than a half-hearted job by many. Concentration applies to the real estate business the same as any other.
Your agent, feeling sure, in due time, of fair compensation for his services, will always be looking out for your best interests. He can afford to advertise your property extensively, spend the necessary time on it, can offer it safely to any brother-broker’s customer and will secure the best possible for you. This will save you the annoyance of dealing with every Tom, Dick and Harry and will avoid the possibility of paying double commission when two different agents introduce your property to the same buyer.
When you appoint one agent to sell your home, he or she negotiates between buyers for the best possible price. However, when many agents are involved in the marketing of your property and multiple offers come in, agents compete with one another to get their offer accepted, which is not necessarily in the best interest of the seller.
With an exclusive agent, there is time to properly qualify the buyers, which enables the agent to adequately advise the sellers which offer is the most likely to result in a successful sale.
I am concerned that if I sign a sole mandate the agent will not do as promised and my house will sit on the market
A professional agent will attach a written marketing plan with a signed service guarantee. If this is not part of the agreement it is advisable to insist on it to protect your own interests.
REMEMBER: It is the person appointed by you that sells your home, not the agency he/she works for.
1. Marketability of a property is improved by pricing correctly
2. Price is the most important negotiation factor to the buyer
3. Price compensates for a property’s shortfalls or inadequacies
4. Interest sells houses – not time
5. Realistic pricing creates interest
6. Initial marketing time is crucial
7. Buyers buy by comparison and elimination
8. Buyers compare price and value for money (in today’s modern age, many buyers also have access to CMA statistics)
- Combine realistic asking price with initial surge of interest
- Maintain negotiation advantage with realistic pricing
- Avoid over-exposure from unrealistic pricing
- Eliminate buyers by out-pricing them
- Choose an agent on “promised price”, but on competence
- Spoil your single chance to make a “first impression” on a buyer
What are the benefits of proper pricing?
· Higher net equity
· Less inconvenience
· More prospects in early stages of marketing
· Agent and Seller enthusiasm
· Higher offers in comparison to marketing price
· Buyer competition resulting in higher selling price
How do we set our asking price?:
Think back to when you purchased your home, how did you determine what to pay for it at the time? You probably compared this home to all the other homes on the market and arrived at a value based on that comparison.
With technology, the internet is a useful source for buyers to compare areas, entry level pricing, average to top end pricing as well as features. However, remember that SOLD properties determine the reality of the market.
A current market analysis is like an x-ray of the market. A professional estate agent can provide you with a detailed look at the reality of the market – so that you can make an informed decision!
Should you select an Agent based on price?
You have two important decisions:
· Selecting an agent on service and marketing plan
· Together discussing and establishing a Marketing Price
Real estate agents don’t establish price – the market place does! So under no circumstances do you select an agent based on price. Professional agents have the confidence to tell you the truth about the market and their role is to sell your home. All the exposure in the world won’t sell an overpriced home and an agent’s enthusiasm about your home will not increase its value. Ideally you should select your Agent first then together you should determine the price.
STATEMENT: “Our home is better than the others!” For a home to seem better than the others it must surpass the following:
· FEATURES, SIZE m² and LOCATION (Permanent and Unchangeable)
· The first thing people think of when buying is: WHERE IS IT LOCATED?!
· We all think that our home is the best – but remember to be objective when determining its value, buyers will be.
· Remember - Market trends will definitely influence your pricing strategy.
STATEMENT: “We have had a previous valuation from an Agent which was higher!”:
You need to assess – When was that valuation done and what was the purpose of that valuation? The more recent the appraisal the more accurate the figures. Changes that affect it are:
· Interest rates – affects the affordability of the market
· Additional homes for sale – it’s simple economics the more houses in supply, the less the demand
· General economy – a static or slow growing economy leads to lower house price growth and weaker demand.
· How accurate and conclusive the statistics that were used are – how did they determine their valuation price?
STATEMENT: “Buyers can always make an offer”:
Your asking price is like an exclusive invitation to buyers only in that price range – the right price attracts the right buyers! If you overprice, you attract buyers in a higher price range with higher expectations. Wrong price attracts the wrong buyers. Don’t allow your home to be ignored by the right buyers!
STATEMENT: “We need the money”:
Your need for money has no effect on the value of the home! Would you pay more if you knew the owners needed the money? Educated buyers recognize a fair price and will be far more likely to pay it. Overpriced homes stand out in comparison to market related homes. Buyers use it to justify the purchase of another. You’d be better off turning down a few low offers than not getting an offer at all.
Your destination property doesn’t affect the value of your current home. Would you lower the price of your home knowing that the person purchasing your home comes from a lower priced area? Statistics indicate that buyers move up in price by up to 50% more than the selling price of their home.
One of the most frequently asked questions is why, if the buyer of a property is paying the conveyancing attorney, the seller has the prerogative to appoint him.
This is a logical arrangement, because in a property transaction, the seller has greater risk than the buyer. In the 1903 case of James v Liquidators of the Amsterdam Township Company, the court declared that "when a person is under a legal obligation to do something to complete a contract, and the circumstances necessitates the appointment of an agent to do it, then that person has the right to appoint his own agent. Both by common law and by statue the seller is bound to pass transfer ..”, and hence the seller has the choice of transferring attorney.
As the normal costs payable by a purchaser are insignificant in comparison to the property’s value, it is important that the seller keeps control – especially where the buyer takes possession/occupation prior to transfer and pays an occupational rent that is lower than his bond repayments. A purchaser may then be tempted to delay transfer in order to pay a lower occupational rent amount as opposed to the higher bond repayment.
When a Seller agrees to a Purchaser appointing the Conveyancer, the Seller runs the risk of the Conveyancer not putting the Purchaser on terms if the Purchaser doesn’t perform in terms of the sale agreement – for example, refusal to sign transfer documents, non-delivery of guarantees, refusal to pay occupational rent et cetera. A Seller will then have to resort to hiring another Attorney to resolve the matter and act on his behalf. A Conveyancer may not act on behalf of both parties as it amounts to a conflict of interest.
If a buyer does ask that his conveyancer be used and the seller agrees, the way to prevent any conflict of interest is to insert a clause to the effect that the seller nominates this conveyancer. This reinforces the message that the conveyancer represents the seller’s interests.
If the seller does not have his own attorney, the real estate agent is allowed to recommend a conveyancer. This can give rise to questions as to why the conveyancer has been appointed, but experienced agents almost always recommend a conveyancer who has a proven track record, is reputable, efficient and can expedite the transfer.
Most conveyancers' fees are the same because they are prescribed and regulated by the law societies – but in some cases the buyer will ask for a specific conveyancer to be appointed because this conveyancer has offered a reduced fee. Conveyancers are often willing to do this if they are allowed to handle both the conveyancing and the bond registration assignments. However, many commercial banks now insist that different conveyancers are made responsible for these tasks. The reason for this is that with two conveyancers, the chances of the price being “loaded” and fraud committed against the banks are significantly reduced.
When selecting a Conveyancer, ensure that the appointed attorney is specifically a Conveyancer and doesn’t only specialise in another field of law. Often when instructions for transfer are sent to non-Conveyancing attorneys, they refer the matter to another person to act on their behalf. Also ensure that the attorney firm you choose is established and has a good reputation.
Lastly, ensure that the elected Conveyancer is based near a Deeds Office. When the firm or attorney is not based locally, the process is often complicated by them handing down the execution of the deeds to third parties.
The decision of the appointment of a Conveyancer is not a small matter – it is a vital one that can either make or break a transaction. Make sure you choose right!
Source: Property24 & STBB (article adapted)
It is not a good idea to make extensive changes without first checking to see that you will not be overcapitalising your property. The money an owner spends on improvements to a property doesn’t always translate into an equivalent increase in its value to prospective buyers. This sometimes results that when you do eventually decide to sell, you can lose out on the money spent on your property and not make the envisioned profit.
Your local estate agent is knowledgeable in current market values of the area and also knows what prospective buyers’ likes and dislikes are in property. It is good to chat to your agent of preference for advice and also get an idea of the current market value of your home before making extensions and improvements. Once you know the current average values of properties in the area, you can establish how much to spend on a project without over capitalising.
Capital gains tax is also a factor to be taken into account when renovating or extending.
If you aren’t considering selling in the next 5-10 years, the chances of overcapitalising are slim, but make sure you are making smart renovations and extensions that will be beneficial to a prospective future buyer as well.
In the end, it is important to strike and balance your needs and the resale value of the property after the extensions or renovations are made. Any changes done to your home should ideally add to your quality of living, while increasing the resale value.
If you are thinking of making improvements or extensions to your property, don’t hesitate to contact me for advice or a free valuation – I enjoy adding value and providing assistance or advice to homeowners in their decision-making process.