One mistake South Africans make when selling their homes

Property experts warned home sellers in South Africa that choosing the wrong sales mandate or agent can delay a sale, reduce the final price, and expose them to costly double commission claims.

Seeff Property Group chairman Samuel Seeff said choosing a sole mandate for the sale or rental of a property will impact how long it takes to sell and the price achieved, and can vitally avoid the risk of double commission.

The double commission risk usually arises in cases where two or more property agents claim to be the “effective cause” of a property sale, which could significantly reduce the seller’s net proceeds from the sale.

A written mandate is legally required by the Property Practitioners Act (PPA) and establishes a contract. This authorises the registered agent to act on behalf of the seller or landlord to market, sell, or let the property.

It defines the terms of engagement, including the agreed price, commission payable, and duration of the mandate.

It also set out the particulars of the property and owner or landlord, conditions of sale, and a Condition of Property Report.

The mandate contract formalises the property agent’s commitment to dedicate resources to marketing the property and provides a structured framework for the transaction process.

According to Seeff, the mandate also helps mitigate against legal risks, such as potential double commission claims.

There are essentially three types of sales mandates from which a seller or landlord can choose. It can be either open, joint, or a sole mandate.

An Open Mandate allows several agents to market the property simultaneously. Sellers usually hope that this may facilitate a quicker sale and a higher price.

However, Seeff said the reality is that agents may be less committed, and the process could become more complicated for the seller, including potential double commission risks.

With a Joint Mandate, two agents are usually appointed to work jointly on marketing the property. This option offers the potential for broader exposure compared to a sole mandate.

Unfortunately, it may also lead to reduced effort and increased administrative complexity, especially when it comes to viewings. Inevitably, the agents may give more effort to their own sole mandates.

This type of sales mandate is sometimes preferred in the case of high-value or specialised properties, Seeff explained.

The Sole Mandate

With a Sole Mandate, only one agent is exclusively appointed. It ensures maximum commitment, focused marketing, and simplified communication and processes, Seeff said.

Since the commission is secured upon a successful sale, the agent is incentivised to invest all their efforts to get the property sold for the best possible price, rather than competing for a quick sale at any cost.

Seeff, however, pointed out that a seller or landlord choosing the right agent is as important as selecting the appropriate mandate.

Sellers should not choose an agent based on a promise of an unrealistically high price, he said. The correct mandate, coupled with an agent who provides an accurate, market-related valuation, is the key to a successful outcome.

While sellers may be tempted to pick the agent who offers the highest price for their property, VDM Law’s Hannah van Deventer warned that they should be careful not to get caught up in a practice known as “buying the listing”.

This occurs when an agent deliberately inflates the suggested listing price in order to secure the mandate from the seller.

Although sellers may feel flattered by the higher offer, overpricing a property will only make it more difficult to sell.

“The longer it sits, the more buyers assume something is wrong with it,” Van Deventer said. “Eventually, the property has to be discounted below market value to attract attention.”

Not only do sellers not achieve the higher “dream” price, but they often end up selling for less than they could have if the property was correctly priced from the start.