If you are selling your property or considering selling it shortly, this article may interest you:
In our real estate market in the Canary Islands, property owners have three types of sales mandates available, each with its own characteristics:
- Open Sales Mandate
- Exclusive Sales Mandate
- Multi-Exclusive Sales Mandate or “shared exclusivity”
I often hear typical phrases like “but I don’t sign anything” or “I don’t want an exclusive mandate, whoever comes first with a client gets the commission.” Besides, I have even read comments from lawyers advising against any option other than an open sales mandate.
I want to explain and analyse the significant differences, disadvantages of some, and specific advantages of others so that you can judge for yourself and understand why, at Canarinvest Properties, we choose to work with one of them specifically.
What is the Open Sales Mandate?
The owner simultaneously selects one or more real estate agencies for the marketing of the sale of their property. Although it may seem attractive at first glance, it shows considerable challenges. These are often agencies whose commitment is more towards buyers than sellers. I’ve observed this for over two decades and must confess that I worked this way myself in the early years.
It’s tempting to see a high demand from potential buyers “invading” the real estate market and letting themselves be carried away by their budgets for acquiring property in Gran Canaria. Therefore, over 80% of real estate agents are more interested in having a wide portfolio of properties to boast about than advising the seller effectively, who often lacks information and support to manage the sale smoothly and without surprises. You would be surprised if you knew the serious mistakes made daily that affect the seller during or after the sale of their property.
The first major mistake in this modality is the price competition: various real estate agencies do not conduct a study on the correct price, accept the price the owner provides, and add their “commission”. Since each real estate agent tries to sell faster than the competition, they compete on the platforms with the final price.
Result: the same property is advertised numerous times, every time at a different price. Consequently, the seller loses control over the sales management, the buyer perceives the competition among real estate agents and takes advantage of it to get an even better price than the lowest one advertised in various media and platforms.
Another significant disadvantage in this modality is the lack of commitment from the real estate agent. Developing and executing an effective marketing and sales strategy for the property requires a significant investment in both money and time from the real estate agent. Without mutual commitment, even the most professional representatives in the industry will not invest all their resources and experience. This property is perfect for real estate agents who take photos with their phones, rarely analyse the market, lack of marketing and valuation tools, among many other things. The goal in this case for many real estate agents is to sell as quickly as possible at the lowest price and with as little money invested as possible.
Exclusive Sales Mandate:
In this modality, a single real estate agency is granted the exclusive right to commercialize the property. Although it can provide certain guarantees, it also has its limitations. The promotion of the sale can be severely restricted and depends heavily on the resources of a single agency. Visibility is very limited, the agency may refuse to collaborate with any other real estate agency, even if it has interested clients. It may also happen that the marketing strategy of the agency is not very effective. In the end, time passes, there are no visits, and certainly no results.
It is crucial to differentiate between an exclusive mandate from an agency that is not part of an MLS, even though it claims to collaborate, and a multi-exclusive mandate from an agency belonging to a powerful MLS since MLSs follow rules and typically use the same management software so that the property arrives immediately and completely to all collaborating agencies.
And what does Multi-Exclusive Sales Mandate mean?
This modality, chosen by Canarinvest Properties, allows hundreds of agencies to work for the seller with a single signature, always led and guided by the trusted agency that has signed the sales mandate with the owner.
And how does it work?
The real estate market in Spain has changed a lot since the beginning of the 2008 crisis. It was mainly copied from the American market, as the real estate industry in the United States has been very mature for decades; with strict ethical codes, professional control by institutions, and, above all, a very sophisticated network of collaboration between agencies. Hence, comes the term MLS (MULTIPLE LISTING SERVICE), which is nothing more than a COMMON LISTING OF PROPERTIES FOR SALE jointly operated by the agencies that are part of the MLS in question.
Each property is introduced in this listings by the “capturing” agency, in other words, the agency that has earned the trust and will represent the seller’s interests during and after the sale. The property enters the MLS “in all its splendour”: with a single price, with all legal situations reviewed, with professional photos and videos, a virtual tour, a compelling description, and much more. The more involved the capturing real estate agency is, this means, the better the marketing plan and the more and better tools applied by the agency, the more successful the sale will be. We are talking about a controlled sale since the property comes to the market with a single price, a single “legal and physical truth,” and “in its best attire.”
Canarinvest Properties belongs to several common listings: one of them is BOICAN (OFFICIAL REAL ESTATE LISTING IN THE CANARY ISLANDS), owned by the Canarian Association of Real Estate Management (ACEGI). We are also members of AGORA MLS, which operates nationally with over 500 agencies, and for outstanding properties, AGORA MLS LUXURY.
After more than 26 years in the industry, I can only confirm that the better prepared an agency is, the more it wants to deploy all its KNOW-HOW to ensure that the sale will be successful. In other words, if you have little to offer, you also ask for little commitment from the owner, and vice versa.
In summary, the advantages of the Multi-Exclusive Sales Mandate are:
1. The agency that has the signed sales mandate will defend the interests of the seller at all times, since it does not compete with other agencies to be the first. This allows, among other things, advising the owner not to accept a purchase offer below the price the real estate agent considers the most appropriate.
2. Broad Geographic Coverage and access to niche markets: In our case, over 500 real estate companies throughout Spain that can have access to specific markets, increasing the chances of finding a suitable buyer. The key is that each and every one participates, and if your buyer is there, we will reach him with absolute certainty in the most efficient way.
3. Personalized Marketing Strategies to highlight the unique features of the property in the best possible way and attract different buyer profiles. Believe me, it is not the same to search for a property for a buyer as it is to find a buyer for your property. This requires planning, strategy, and a lot of dedication. Therefore, at Canarinvest Properties, we focus on a few properties, but with heart and soul.
4. Efficient Coordination between agencies, ensuring that information is up-to-date, and the property is presented in the best possible way on all platforms. It also avoids visits with unqualified customers or the same property being visited by different real estate agents with different clients.
Agencies belonging to MLSs are accustomed to sharing fees. Otherwise, agencies that do not participate often tell the owner that they have a buyer but are not willing to share fees with another agency. Is there a better example of self-interest? The agency must ALWAYS defend the interests of its client, the one who has signed the sales mandate, and that is THE SELLER.
Finally, I would like to address a question that often arises regarding the “real estate service letter”: Do I have to choose all services? Will it be cheaper for me if I do not take all the services offered by the real estate agency? Answer: And if you need surgery, does it make sense to skip the anaesthesia? Or the antibiotics afterward? Do we skip the blood test or the electrocardiogram?
Just as we trust the healthcare professional, or the mechanic, IT-specialist, or plumber, why not let ourselves be advised and guided by the real estate professional?
In my next blog, I will write about how to choose the best real estate professional so that you have good criteria when making that important decision.
I want to emphasize that, for us, after so many years in the industry and having tried various modalitites and checked the results of each one, the multi-exclusive option is the most powerful and versatile for the seller seeking maximum visibility for their property and the greatest number of resources to increase the chances of closing the sale in the best possible way.
Our numbers don’t lie – an 85% success rate in the last 5 years!
If you want to know more details, do not hesitate to contact Canarinvest Properties.