Before we get into the actual debate of sole mandate vs open mandate, let’s clear what they mean.

→ Sole Mandate or Exclusive Mandate

Sole Mandate or an Exclusive Mandate are legal contracts wherein a single real estate agent or firm is authorized to market the property on behalf of the owner. Sole mandates can be for lease or sale. The property owner cannot market the property through his personal resources. Sole mandate contracts are time limited. They normally range from 3 months to 1 year.

→ Open Mandate

Open Mandate means the property is open for sale or lease by all and any agent. The property owner is free to approach as many real estate agents as he wishes to. The property owner can sell or lease the property himself also.

Most Mumbai real estate agents prefer sole mandates. However, Mumbai property owners have a different perspective. They are under the impression that more agents marketing the property results in more exposure. Thus, their property will sell quicker. Mumbai property owners are also apprehensive. They do not want to tie themselves down with one real estate broker. Their concern is that the real estate agent might not focus on their property. However, nothing is far from the truth than that.

A reputed real estate agent will ensure that a sole mandate property is marketed fully through all channels. They will focus more on the sole mandate property. It is a time limited contract. Any goal oriented real estate agent knows that he has to close the deal on the property. The owner will not renew the contract if he doesn’t close the deal within the time period. The real estate agent will ensure the property owners gets maximum price. After all, the more money the owner makes, the more commissions he is going to make. More than anything else, a sole mandate property is assured commissions for a real estate agent.

👉🏽 Open Mandate: Estate Agents Compete With Each Other

An open mandate gives several real estate agents access to the same property. Agents will compete against each other to ensure that they close the deal before someone else does. Property owners falsely believe that their property will close quicker. However, what actually happens is that each estate agent tries to ‘throw’ and ‘push’ the property to all and every buyer in the market. They hope and pray that one of the buyer closes the deal. The whole process is fruitless for the property owner. It also creates a negative impressions in the minds of the buyer. Buyers start wondering why is the same property proposed by multiple brokers. All it does, is bring several unqualified buyers to your property. Few buyers will eventually give an offer. Those offers will be way below the market price.

Buyer offers received are scattered and isolated. Only the owner is aware of the offers. Competing real estate agents who are unaware will continue giving similar low offers. As a result, few owners start doubting their price strategy. Eventually, the owner might accept an offer lower than his expectation and below the market price. He might not be aware that another agent might be dealing with a buyer giving a higher offer.

Often, in open mandate, real estate agents quote varying prices. One real estate agent might quote lesser then the other real estate agents to attract the same buyer. This creates confusion in the mind of the genuine buyer. They start doubting the property. Genuine buyers perceive the property to be a quick sale or even worse a Distress Sale.

There is also an ugly side to open mandate properties, which very few people discuss. Unscrupulous real estate agents purposely manipulate the numbers to ensure that the property does not sell or rent. If by any chance a real estate agent finds out that a deal is nearing closure, he will simply call the owner and give a ridiculous offer as bait. The owner obviously will consider the higher offer. He might delay or even worse, miss out on a genuine buyer because of the bogus offer.

👉🏽 Sole Mandate: Buyers Compete With Each Other

You might be wondering, how do buyers compete? In sole mandate properties, offers are qualified and filtered through one professional estate agent. The owner is ensured that an offer once rejected will not be back on the table again. A buyer once rejected because of his offer does not come back around through another real estate agent. The same buyer has to increase his offer price in order to be in the bidding race. Property offers received get streamlined. The real estate agent is aware of the offer history. He eliminates rejected offers from the get-go. Expectation of the potential buyer is set in advance. This creates competition between buyers. Competition between buyer fetches the best price for the property and the owner.

Sole mandate agents eliminate doubts and create exclusivity. Buyers perceive exclusivity positively which creates value. Today’s internet age buyers are savvy. They have unlimited research tools on their finger tips. A genuine buyer understands that there is an honest relationship between the sole mandate agent and the property owner. He respects it and ultimately relies on the advice of the sole mandate agent. This creates a smooth and transparent transaction for the buyer as well as the seller.

Accountability in a real estate transaction is very important. A real estate agent can be held accountable for his actions or inactions. The property owner will and hold his real estate agent responsible on why isn’t the transaction closed. Sole mandates come with huge responsibilities. The property owner will see how much effort the real estate agent has put in the property. If he is satisfied then they can have an open discussion on the reasons of failure despite multiple visits. A revised plan can be decided for the way forward. The sole mandate will not renewed if the property owner is dissatisfied with the results.

Property owners have to make their choice wisely. Sole mandate agents work hard to close a deal. They use their experience and expertise to appropriately price the property. They device and implement a marketing strategy. They keep rogue real estate agents at bay. They convince genuine buyers for the right price. They work in close co-ordination with the legal advisers to ensure legal agreements are not one sided.  They work with government authorities to register the document.

It is easy to see what is the smarter choice in sole mandate vs open mandate. However, in the end it is you who decides the path you wanna choose!