What Is a Mandate?
A mandate is a contract under which a property owner (as principal) authorizes a real estate broker (as agent) to find a buyer for the property on the owner's terms, for which service the owner pays a commission. A mandate is an agreement between a Seller and the Estate Agent(s) regarding the marketing of a property, the agreement duration, and obligations for both parties.
- In real estate, a listing agreement is a contract between a property owner and a real estate broker that authorizes the broker to represent the seller and find a buyer for the property.
- The four types of real estate mandates are sole, sole & exclusive, multi-listing, open/dual mandate.
- A mandate is an employment contract rather than a real estate contract: The broker is hired to represent the seller.
The mandate also specifies the listing price, agent's duties, seller's duties, agent's commission, terms for mediation, an automatic termination date, and any additional terms and conditions.
While listing agreements are legally binding, it's possible to terminate the contract in certain situations—for example, if the broker does nothing to market the property. Besides, the listing agreement will be terminated if the property is destroyed (e.g., by a fire or natural disaster), or upon the death, bankruptcy, or insanity of either the broker or seller.
Types of Listing Agreements
A sole mandate is when one Estate Agent has exclusive rights to sell your house within a specific period, usually three months. The agent would be entitled to a commission regardless of who sourced the buyer, although it is usually the agent. This is the best type of mandate as it provides for a single agent focus and avoids double commission risks
Sole and Exclusive Mandate
Nobody (including the seller), except for the estate agent holding the sole and exclusive mandate, is allowed to market the property before the expiry of the determined period of the mandate. This means that should anyone other than the mandated estate agent sells the property, the seller will still have to pay commission to that estate agent.
The estate agent is still entitled to his commission if he introduced a buyer to the property during the mandated period, and this buyer only purchases the property after the expiry of the mandate.
A multi-listing mandate is when Agents from different agencies have the right to sell your property. After a sale, the Agent’s commission is split between all listing agencies involved. Usually, the agent who sources the buyer will be entitled to commission. Since multiple agencies are working on the property, it is unlikely to receive the focused attention that a single agent would provide.
An open mandate means that the property is on the books of more than one Estate Agent, and each Agency has the right to sell the property, without being required to share the commission.
Many different estate agents can have the mandate to market your property, meaning that one estate agent cannot claim to have the sole right to market it.
Should you need assistance with selling your home, please call us. We have a large database of qualified clients waiting to buy a home. And we use the latest marketing strategies to sell your home in the shortest time possible.
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