MULTI LISTING SERVICE (MLS) MANDATES
SO WHAT IS A MLS MANDATE?
While it is a system frequently used by sellers in countries such as the United States, it also has gained merit in South Africa, where it is fairly widely applied. The property is listed by the agency of the seller's choice, and is then opened up to the local multiple-listing service members, any of whom can market and sell it.
This can provide a form of guarantee of good market exposure, but be prepared to be inconvenienced.
Agencies belong to these MLS organisations (In Port Elizabeth it is RNS) and when a property is listed, it is open to all other member agencies who may now bring their buyers and are guaranteed to receive a commission split.
FIRST - HOW DOES PROPERTY NETWORK OPERATE
We automatically market a client's properties as broadly as possible and other agents know we willingly share commissions if they bring buyers. In fact, this principle is an integral part of the PROPERTY NETWORK philosophy so you are guaranteed exposure to our entire network as well as every other agent in town - even on a sole mandate.
Whereas many agents refer to others, as their competition, we view them as our colleagues. Part of a team with which to co-operate. In this manner, we have the majority of buyers and sellers at our fingertips. All to your benefit.
Our priority is to sell your home – not to hog the mandate just so we can make higher commissions. The mathematics is simple – rather 10 quick sales at smaller commissions than holding on for the one big commission – which invariably never arrives.
So with PROPERTY NETWORK, you get all the benefits and committment of a sole mandate plus all the possible perks of a MLS mandate!
A LITTLE MORE ON MLS TYPE MANDATES
The Mandate
In order to market your home through most multi listing services, you are required by these organisations to sign a "letter of authorisation". This is in fact an exclusive mandate of sorts. You authorise the agent to sell your property while placing it on the MLS system.
One caution though. Sellers are often told that all agencies will have access to bring their buyers, which is not true! It is all agents affiliated to that particular Multi Listing Service only. Many agencies are not affiliated with an MLS and are therefore not included!
Pricing Correctly
MLS agents often compete to be the first to list your property. The listing agent receives a part of the commission from a successful sale. While we have no problem with sharing commission, many unscrupulous agents will take the listing at an inflated price just to secure this share of commission.
It is true that the seller decides on the asking price, but an agent has to give an opinion on the market value if asked, and this opinion has to be based on statistics of comparable properties that have recently sold (If such sales have occurred). An agent should never quote an inflated price in order to get a listing. Such deception is a transgression of the Code of Conduct for estate agents.
Sellers, NEVER EVER appoint an agent on the basis of the price they quote for your home. This high price might seem attractive and flattering at first but the true horrors of overpricing soon become apparent. The worst part is that the crooked agent doesn't care. They know that, in order to sell, your price will drop over time. It will drop and drop and drop and drop and eventually sell. It might sell well below the actual market value, but the deceptive agent eventually gets paid. Male sure you read the article on correct pricing.
OK, you've avoided the first pitfall and listed your property with an MLS at a market related price. What happens now?
Open Hours
Each house listed on an MLS system has to have an open hour. The listing agent will, on this day, invite all other agents affiliated to the MLS to come and view your home so that ;
1) They are familiar with the home if they wish to sell it and
2) To provide an estimate of what they believe the market value is.
There can obviously be great benefit to this system but do remember ;
- Only a few agents view each home so full benefit is lost in exposure.
- They do not always take the valuation process seriously or simply might not be able to evaluate professionally, so valuations might not be accurate.
It is also at times incorrectly believed that more than one agency will be marketing your property. In reality, the listing agent is still responsible for the marketing - ensuring it is advertised in the paper, pamphlets are dropped, placed on web portals etc. The other agents simply bring their buyers if they have.
You can't pressurise the other agencies to market your property consistently. They can come and go as they please.
And remember - buyers are searching for properties not agents - so the marketing plan of the agent you choose must still be top notch. Once again, a good reason to just appoint a Property Network agent with a sole mandate. Go here to find out a little more as to why.
Commissions
Many buyers go from one agency to another to find properties on sale, so it's quite possible that the same buyer may be introduced to you by different agencies.
You need to exercise some care here, as you may be liable for double commission to both agencies when you sell. You'll always be obligated to the agency that actually concludes the deal, as its sales agreement will bind you contractually to pay its commission. If another agency brought the same buyer to you previously and presented you with a written offer for the same purchase price, or higher, it can claim commission too on the grounds that it was the effective cause of the sale. It won't help you to say you weren't willing to sell initially but changed your mind later.
Make sure the agency finalising the contract indemnifies you against any claim for commission by the other. This caution does not apply where the first agency merely introduced the buyer to the property and nothing further transpired.
Loss of Control
As other agents bring their buyers through, your main listing agent does not get the full picture of what the buyers are feeling, which makes it difficult for them to provide you with an accurate assessment and therefore advice. Your listing agent may not contact the other agent's buyers for follow up as this would breach the Code of Conduct.
Exactly how good are the other agents selling skills? Are they experienced negotiators? Did you miss out on a sale just because the other agent couldn't close when they should have?
These are very real questions to ask - and reasons to rather ensure you appoint a experienced and qualified Property Network agent that can be in control of the process.
SUMMARY
Using a multi listing mechanism (RNS in Port Elizabeth) has it’s obvious benefits, whereby your property is exposed to a multitude of agents and potentially, you could have a better chance at a quicker sale.
Control over the selling process is however weak and then there are the other lost control issues of security, accountability and feedback.
Also, with a sole mandate, the agent has the authority to reduce commissions if that is critical to assisting in getting the deal closed. With an MLS mandate however the commission is set by the organisation, as there is more than one party with a vested interest in the commission.
In general, and in theory, MLS mandates are a viable option but considering benefits lost against a Sole Mandate the seller must carefully consider taking this route.
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