What is an Exclusive Mandate?
An exclusive mandate is a written agreement that gives a brokerage the exclusive right to market and sells a property. Included in this written agreement is the mandated length (usually 90 days), selling price, commission rate, and any other T’s & C’s.
The biggest misconception around exclusive mandates is that fewer consultants equal more risk for the seller. Or alternatively, that more brokers will lead to a bigger pool of prospective buyers, as well as more offers.
This line of thinking has led sellers to believe that an exclusive mandate is not as beneficial for the owner as it is for the consultant.
There are considerable benefits to agreeing to an exclusive mandate with a consultant that far outweigh an open mandate agreement:
- An exclusive mandate guarantees a consultant’s full attention to a project
- The increased probability of revenue ensures your property will be prioritized and should receive qualified buyers or tenants.
- More consultants do not necessarily mean more buyers. The reality is that at any time, there are a finite number of buyers looking for property and brokers are aware of this.
- Often an exclusive agreement can be leveraged to achieve a better fee structure for the seller as well as increased marketing spends from the company taking the property to market.
- Sellers enjoy a one-on-one direct relationship with the consultant as opposed to dealing with a horde of different brokers working on the deal. More importantly, the likelihood of having to pay a double commission is eradicated.
More Than Just a ‘Number’
Unfortunately, in the case of an open mandate, skewed competition between multiple consultants can lead to situations where an agent will try to close the deal as quickly as possible and push the client into accepting the first offer.
Once this pressure is removed, a client can rest easy knowing that the price achieved on an exclusive mandate agreement will be the highest achievable on that deal.
What to Ask When Selecting a Broker?
Look at their experience in selling the specific type of asset you’re hoping to take to market. Ideally, in the same area as the buyer pool.
Commercial property is vastly different from a residential property in this respect; the asset is usually held as an investment or property to locate your business in. Therefore, owners (more often than not) own multiple properties as opposed to residential where a home may be the owner’s sole asset.
It’s advised to look at the broker’s social media presence and activity across the various platforms. You should also look at who is following the company and their track record across the board.
Ask to see examples of their previous marketing packs and campaigns. The broker should have a solid understanding of the financial principles used in the valuation of a property as well as a firm grasp on how to look at a sensitivity analysis for the property and any variable that may impact the final value.
Chat to our team of brokers to find out more about the benefits of an exclusive mandate.