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Terms and mandates

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    The sales mandate is a bilateral contract signed between an owner and a real estate agent. The first step in the transaction is the OBLIGATORY DOCUMENT so that a professional can put a home on the market and find buyers on behalf of the owner. It brings together all the essential and decisive information of the sale, as well as the means of action implemented by the agency to achieve the desired result. It supervises a specific service delivery, more or less important depending on the type of mandate, which takes place over time from its signing until the signing of the authentic deed of sale. Since the Hoguet Act of 1970, the sales mandate has been mandatory..

    More than half of sellers use a real estate agency for their transaction: Many homeowners find it’s not so easy to sell their home on their own.

    The real estate agent will advise you at all stages of this difficult journey, from the determination of a fair sale price (by knowledge of the market and prices), to the preparation of a solid file (technical diagnostics, condominium documents…), to the sale (development of the advertisement,  professional photos, writing, dissemination …), to the method of marketing, but also in the selection of potential buyers.  

    Finally, a real estate agent will support you when negotiating  the sale price by the client, for a transaction carried out on the best financial terms.

    Content of a sales mandate

    There are several types of sales mandates, but whatever they are, they must include the following to guarantee the rights of the owner-seller. The agency must for its part ask for all the title deeds, and documents necessary to determine the identity of the owners of the property put up for sale, all of whom will have to sign the warrant of sale

    • Seller designation : This may be one person, or several in the case of an undivided property. The coordinates of each must be specified.
    • Agent contact information (agent): he may act on his own behalf (independent agent) or on behalf of a real estate agency. In all cases, he must hold the real estate agent card, the number of which will appear on the warrant.
    • Property description: The property for sale must be detailed. In addition to the address, a comprehensive description of the facilities and annexes will be written. In particular, it must include the numbers of the lots put up for sale.
    • Price of the property: This is the amount the owner will receive when the property is sold.  If the agent makes a formal offer from an acquirer willing to pay the price mentioned in the warrant, the owner may be obliged to make the sale. or risk paying a penalty.
    • Agency fees: This is the compensation the agent will receive in exchange for his services. This may be a percentage of the sale price or a lump sum. It is important to remember that agency fees are due only in the case of actual real estate sale, after signing the deed of sale with the notary. The mandate itself does not trigger any remuneration.
    • Duration of the sales mandate: It is usually 3 months, and at the end of this initial and irrevocable period, it is extended by tacit renewal by three months, without being able to exceed one year. until termination. The maximum duration of the sales mandate must also be specified.
    • Means implemented by the agent: This is a novelty of the  Aluract. From now on, agents must detail in the mandate the actions they will implement to carry out the sale of the property: means of distribution of the advertisement, sales file, periodicity of reports, etc.

    Different types of sales mandates

    The exclusive sales mandate

    It is the one that guarantees the maximum commitment of the real estate agency, the only one authorized to sell the property. It is often accompanied by a sign on the place of accommodation and a good position on the agency’s channels (window, prospectus, exclusive network, website…). Some owners rightly consider that the proliferation of ads in agency or on the Internet can serve the attractiveness of the property. The exclusive sales mandate is the ideal solution if you want to entrust the search for buyers to a single agency. Its main advantage is this: it ensures a better promotion by the real estate professional,  whose rights and duties are more impactful. It provides a high quality of service.

    In the case of an exclusive sales mandate, the agent therefore devotes maximum time to the search for serious buyers. Securing the commission encourages working with a small number of constituents. For each of them, the agent will activate his networks, broadcast the ad and make sure that the property sells at the best price: with the commission at the percentage, the objectives are common. It is no coincidence that the exclusive mandate is offered first by the agents: to your advantage, it will guarantee you optimal marketing over the long term of the mandate.

    The exclusive mandate is a guarantee of efficiency for the seller and confidence for theprofessional. It guarantees a greater likelihood that the sale will be concluded at the best price and in a shorter time frame; much more easily than with a simple mandate. In general, you guarantee a faster sale and at the best price. In addition, an exclusive mandate  enhances your property and reduces the margin ofnegotiation. Since it is only available at an agency, the purchaser who has made his choice cannot attempt another sales channel to lower the price by trading.

    The sales commission is the only remuneration of the professional. It is due only if the transaction is carried out, and payable after the signing of the authentic deed of sale at the notary.

    Despite these assets on paper, the exclusive mandate requires you to grant yourself the services of a single agency. Since your choice was based on this only trusted partner, you give him the task of selling your property for a period of 3  irrevocable months as conceived by the law.

    The simple sales mandate

    The sales mandate, simple as exclusive, is always a contract signed between an owner and a real estate professional. It authorizes the latter to put a property on the market, to meet potential buyers and to present them to the seller.

    The non-exclusive sales mandate frames a service service from the real estate agent who will take care of selling your property. You can use several agencies, but also sell your property on your own, from individual to individual.

    The non-exclusive sales mandate allows a real estate agent to use to sell his property with minimal constraints. Often called a simple mandate, it offers the possibility to deal with several agencies at the same time, but also to carry out a direct sale between individuals: The seller is allowed to broadcast his ad himself on the internet or on paper and to carry out a direct sale, from individual to individual. This allows it not to pay agency fees and to optimize its selling price.

    But even if it is more flexible than the exclusive mandate, the simple mandate is nonetheless regulated! It only allows direct sales on one condition: the customer must not have discovered the property with an agency. It is forbidden to evict a professional agent to avoid paying a commission. This is why the sales mandate makes the visitor  voucher  mandatory. This clause extends beyond the irrevocable duration of the single mandate, which is usually three months.

    When a potential buyer visits a property with an agency, he signs a visitor voucher. This document is used to prove the role of intermediary of the real estate agent. On the visiting voucher is mentioned the duration of prohibition of direct sale,which runs beyond the term of office (up to 24 months).

    When making a direct sale, the owner is bound by the terms of the sale mandate he has signed to communicate the identity of the purchaser to the agencies engaged in a simple mandate. This applies even beyond the term of office, up to 24 months. After verification, if the buyer has not visited the property with a commissioned professional, the direct sale is valid and no commission is due.

    Cancel a sales mandate

    Cancel an exclusive sales mandate

    The terms of the exclusive mandate apply for an irrevocable period under the contract, usually 3 months.

    Beware, most exclusive sales mandates are tacitly renewed:  to get out, you have to make a termination process.

    This consists of sending a registered letter with acknowledgement,15 days before the end of the period of irrevocability. The letter notifies the non-renewal of the mandate, ending at the end of the planned period between the two parties.

    Cancel a sales mandate without exclusivity

    The non-exclusive sales mandate has an irrevocable duration of a few months usually three months. At the end of this period, the sales mandate is renewed by tacit renewal, in increments of one month. To terminate it, it is therefore necessary to send a letter of termination, by letter recommended with acknowledgement, with notice of  15 days before the expiry of the current irrevocable period..

    The principal also has a retraction period  allowing him to cancel the sales mandate. It is guaranteed by section 1122 of the Civil Code and applies to all non-exclusive sales mandates, even when it is not mentioned on the contract. The withdrawal period is  14 days from the signing of the mandate.

    The non-exclusive sales mandate authorizing a direct sale from individual to individual,the owner must inform the agencymandated to announce the termination of the mandate, which will take effect at the end of the period of irrevocability, and communicate the contact details of the purchaser. This ensures that the purchaser has not visited the property with the agency and ensures that no commission is to be collected.

    The real estate search mandate

    It is a contract between a potential buyer and a real estate agent (or agency) that  gives the agency the task of finding a property compliant with the search for the purchaser. Like the sales mandate, this search mandate is regulated by the HOGUET Act, supplemented by the ALUR Act, and the content of the contract is very similar.

    It must determine the search criteria of the purchaser, its budget, the terms of the transaction, and the remuneration of the real estate agent which will be due only if its mission is successful and payable after the signing of the authentic deed.

    Visits to real estate (with visitor vouchers) or pre-contract signatures (promise or compromise of sale) are not enough to justify agency fees. 

    Agency fees related to the search warrant cancel the commission related to the sales mandate, or vice versa.

    The “apartment hunter” is a specialist in real estate research. For the buyer, it is a professional at the service of your real estate project. He will implement his networks to find the good of your dreams. 

    The costs related to the search mandate are not considered part of the sale price, this is an important distinction because the acquisition fee is not applied to their amount. The savings for the purchaser can range from several hundred to several thousand euros, depending on the price of the property.

    The Alur Act made it very clear that the search mandate must of course precede the visit of the property. It is forbidden to sign a search warrant after the client has visited the property. This is considered to be a manipulation aimed at reducing acquisition costs: when the time between the signature of the search mandate and that of the offer to sell is unusually short, the mandate may be invalidated.

    The commitments of the research mandate are important on both sides:

    The purchaser agrees to pay the agency fees if the sale is concluded, and if the search mandate is exclusive, he will owe the costs even if he buys a property without going through the mandated agent,

    The agent undertakes to offer accommodations that correspond to the client’s expectations, he must also make regular reports to the buyer. In the event of a visit, he must not omit any information that might interest the future purchaser, or risk being at fault and having to pay damages. 

    Content of a search warrant

    • Identification of the purchaser: the contract must mention its contact information (name and surname, address, date of birth, marital status, nationality…).
    • Agent identification: the sales mandate must specify his name or the name of the agency, but also his real estate agent card (also called a grey card), his civil liability insurance, the address of his company, his NUMBER SIRET…
    • Description of the property sought: location, the number of rooms (and bathrooms if any), the condition of the property and the building, the installations (type of heating, electricity…), the view, the neighborhood, the private parts, the annexes, the construction of the land, etc. 
    • Price of the property sought
    • Terms of pay: This may be a percentage, but also a fixed commission. In the case of a percentage, the search mandate must state its value. This is essential to get a clear idea of the amount to be paid before drafting the compromise or promise to sell.
    • Term of office: it is usually three irrevocable months, tacitly renewed in one month, until termination.
    • Means implemented: Since the Alur Act, the search warrant must recall the agent’s duty to inform the purchaser. In particular, the contract must mention the periodicity of the reports.
    • Type of mandate: it can be simple or exclusive.

    Simple or exclusive search mandate

    There are two main types of research mandates: the simple or exclusive mandate. The first allows the buyer to search in parallel with the agent. He can even call on another real estate hunter, if he wishes.

    In the case of an exclusive mandate,on the other hand, only the agent is authorized to carry out your search for real estate.

    The exclusive search mandate

    The agent has the exclusivity to make your real estate purchase project a reality. It is also called an “exclusive buy mandate”: it discourages you from using another agency or dealing directly with an individual. If that were the case, you would have to pay a commission to the mandated agent no matter what.  

    The exclusive search mandate must be signed if the future purchaser wishes to entrust a single agent with the task of finding him a real estate. The contract is governed by the Hoguet (1970) and Alur (2014) laws. It includes:

    • Contact information of the purchaser and agent (with his or her professional agent card number);
    • Characteristics of the desired good
    • Maximum price the purchaser is willing to pay (or price range);
    • Term ofoffice, usually 3 irrevocable months, renewed by tacit renewal;
    • Agent’sfee, percentage or fixed, collected only if the sale is made.

    Once the exclusive search warrant is signed, the agent is required to offer goods in accordance with the client’s wishes, and to show them around (with a visit voucher to prove his role as an intermediary).

    If the sale is completed, the purchaser is required to pay the agent the commission  set out in the exclusive search warrant. It is usually calculated from a percentage of the sale price of the property which is around 5%.

    The signatory of an exclusive search warrant has a 14-day retraction period. During this time, it is possible to terminate the contract without justification.

    An agent cannot receive two commissions for a transaction in which he or she would have received both a sales warrant and a search warrant. A professional cannot be a judge and a party, let alone charge two commissions for a single sale (one to the seller and another to the buyer). For this reason, the accumulation of sales and research mandates is prohibited..

    Finally, real estate agents are not allowed to sign a search warrant if a property has already been identified by a buyer..

    The signing of the contract must precede the prospecting work, otherwise the search mandate is not justified. This type of practice is equated with manipulation to force the payment of a commission: some court decisions have cancelled agency fees when the time between a search warrant and a promise to sell was too short (approximately 24 hours).

    On the buyer’s side, if the property has already been spotted, there is no reason to sign a search warrant: a simple visitor voucher  is enough to see the accommodation.

    Pros and cons of the exclusive search mandate

    The benefits of the exclusive research mandate: unwavering involvement

    Signing an exclusive search warrant allows the agent to guarantee his commission in the event of a sale. This is an additional source of motivation: in theory, he will do everything possible to find the apartment or house he is looking for. The purchasers therefore justify the choice of the exclusive sales mandate by the consideration of a  high-end service..

    The downsides: why stick to one agent?

    The downside of the exclusive search warrant is to block you with a single agent for several months. It all depends on how effective it is. This is why many buyers prefer to sign a simple search warrant.

    in MandatesSale
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