The residential property market is a competitive one at the moment as the economic and political conditions have made buyers extra cautious in their purchasing endeavours. Although well-priced homes are selling within a reasonable time frame and the market is active, according to Debbie Justus-Ferns, divisional manager of Renprop Residential Sales, who reports her division has had its best month yet during June, some sellers are enlisting multiple agents to sell their home due to the pressurised trading conditions currently being experienced in the residential property market.
Justus-Ferns believed this is a mistake, as sellers who make use of many agents to sell their home open themselves up to a host of complications, some of which can be exceptionally costly. She discusses some examples.
Creating the wrong impression
When many agents are selling one property, invariably each agent will use a different photo and price the property differently. “This sends out the wrong message to the buying market,” says Justus-Ferns. “Aside from confusing buyers, it creates the impression that the seller is desperate and therefore will be likely to accept any cheeky offer. Listing one property with multiple agents will therefore more than likely lower the price that the market will be willing to pay for the property.”
Double commission claims
Justus-Ferns says that the danger of sellers being liable for double commission in a situation where many agents are marketing a home is real.
Buyers may have seen the property with one agent, but then discover that another agent has it listed at a better price. Buyers will then naturally make an offer with the agent who has the property listed at the lower price.
Justus-Ferns explains that the agent who introduced the buyer to the property initially has just as much right to claim full commission on the sale of the property as the agent who took the offer that was accepted by the seller. Therefore the seller will be left in a situation where they are legally obliged to pay two agents full commission on the sale of their property, which can be exceptionally costly and means the seller walks away with less from the sale.
Legal action around false expectations
“Many sellers are not properly informed about the binding nature of accepting an offer to purchase, and don’t understand that they have signed legally binding document,” says Justus-Ferns.
This can open the seller up to legal action in the case where multiple agents are marketing one property should the seller accept two offers from two different agents. Justus Ferns cites an example where a seller accepts an offer on their property from one agent that has suspensive conditions like a bond that needs to be granted or another property that needs to be sold first. The offer to purchase stipulates a time frame in which the suspensive conditions need to be met. Another agent then comes with a cash offer which is more appealing to the seller as they don’t have to wait for any suspensive conditions to be met. They accept and sign the cash offer thinking it means the first offer falls away. This is not the case.
“The first offer always takes precedence,” says Justus-Ferns, but explains that the agent with whom the seller signed the second offer to purchase can sue the seller for the full commission should the suspensive conditions on the first offer be met. “Furthermore, in this case the purchaser who made the second offer can also sue the seller for creating false expectations.”
It is the sellers obligation to make sure they have a copy of the first offer they signed in order to determine the terms and conditions attached thereto, and to be upfront with all the agents marketing their home about any offers they have accepted.
Danger of a breach in security
Opening up your home to strangers on a show day or by appointment with an agent is always a security challenge, and the onus is on the seller to ensure all valuables are secure and locked away. However with multiple agents marketing a property, the security risk becomes even higher, according to Justus-Ferns who also points out that not all agents are conscientious about accompanying potential buyers around the home or even meeting them there for a viewing.
Justus-Ferns says that sellers need to remember that buyers are not loyal to agents and that all agents are in essence tapping into the same pool of buyers. “This means that an open mandate won’t necessarily mean accessing more potential buyers. Sole mandates really do work best for selling a home at a good price in a reasonable amount of time, and cut out the hassle of dealing with many different people and opening the seller up to all sorts of risk.”