Wednesday, February 25, 2015

Selling property? Signing an agency mandate

If you are selling a property in France you  can do this either privately or using the services of an estate agency - or indeed using a combination of both. Here briefly are the options available:

1. Estate agency - 'mandat simple' (simple mandate). Signing a simple mandate with an estate agency, either French and/or British, enables you to benefit from the marketing skills of the agency, and normally also allows you to market the property yourself - or indeed use two or more agencies at the same time. The 'simple mandate' sets out the address and description of the property and the commission - expressed as a percentage of the selling price and in figures - that the agency is entitled to receive if they manage to secure a buyer and a sale results. It is generally advisable to use no more than three agencies, particularly if they are all located close to the property, as this can create confusion among potential buyers. If using more than one agent, it is sensible to agree the same advertised price with each of them, based on one or more estimates of the property's value. Using several agencies can also allow you to choose, for example, one or more local ones, and perhapss an 'international' agency that advertises to non-French buyers.

2. Exclusive mandate - 'mandat exclusif'. This is much the same as the above except that you sign a mandate with a single agency and they alone have the right to market and try and sell the property. You do not have the right to appoint other agencies or market the property yourself.

3. How long does the mandante run? In the case of both simple and exclusive mandates, most generally run for a minimum of three months, after which you have the right to cancel. In today's slower property market, an agency may ask for a longer period. If you do not formally cancel the mandate after this initial period, the mandate is presumed to continue until you decide to cancel, or lapses after a fixed period, say 12 months.

4. What if I find a buyer myself? In the case of a simple mandate you can deal with the buyer directly and the agency does not earn any commission. In the case of an exclusive mandate, it is normally agreed that the agency will receive its commission even  where you  have found your own buyer. Disagreements can sometimes arise where it is argued that a 'private' buyer has traced your property through the agency's advertising and you might prefer to negotiate a compromise (part commission) with the agency rather than face possible litigation.

5. What happens if a buyer, introduced by the agency, approaches me direct and wants to negotiate a deal direct? This can and does arise, as such potential buyers invariably wish to offer you the 'net vendeur' price - the sum you would receive after paying the agency commission. This means you are in the same position finncially as if you had sold through the agency. You would also be in breach of contract, having broken the terms of your mandate with the agency and risk being taken to court. Note that French law is very strict on this issue and the courts invariably decide in the agency's favour.

6. What happens if a buyer, originally introduced by the agency, comes back to me after I have cancelled my mandate with the agency? Again, you will find a clause in your agency mandate (simple or exclusive) covering this possibility, normally entitling the agency to its commission for a stated period after cancellation. In practice this can be for six months to two years in my experience and I would advise negotiating  the shortest period possible before signing a mandate.

7. Keeping in contact with the agency - No news generally means 'no buyers' and if your agency is silent for long periods this is invariably why and you might start thinking of changing agencies or other options. For your part, particularly if you have signed a simple mandate, you should inform the agency as soon as you have a firm offer from a genuinely client, in order to avoid wasted visits etc. This enables the agency to mark your property as 'under offer' and you should again inform them if your potential private sale happens to collapse and you want the agency to continue marketing your property.

8. Finally, note that signing a sales mandate with an estate agency means that you, the property vendor, are entering into a binding legal contract, and you need to be fully aware of the implications of the various clauses outlined above. If in doubt, best to take advice before you sign anything.