Understanding the Delegation of Mandate between Real Estate Agencies
In the real estate sector, delegated management is a strategic tool that allows a real estate agency to entrust the management of a property to another agency, while maintaining the relationship with the client/owner. This mechanism is particularly relevant for luxury properties or in geographic areas where an agency may lack the expertise or reach necessary to effectively market a property. In this article, we will explore what delegated management between agencies is, how it works, and why it can be an advantageous solution for both real estate agencies and property owners .
What is a Delegation of Mandate?
Delegation of mandate is a practice whereby a real estate agency, known as the delegating agency , entrusts another agency, known as the delegated agency , with the right to sell or rent a property on behalf of the owner. This practice allows the delegating agency to benefit from the networks, expertise, or geographical coverage of another agency while retaining the rights associated with managing the transaction.
It is essential to note that, even if the mandate is delegated, the delegating agency remains responsible to the client who owns the property. Delegation does not transfer legal responsibility, but simply allows for a sharing of the marketing workload.
How does the Delegation of Mandate between Agencies work?
1. Signing of the Mandate
The delegation of mandate begins with the signing of a contract between the delegating agency and the delegated agency. This contract specifies the terms of the delegation: the duration, the delegated agency's responsibilities, the sharing of fees, and the obligations of both parties.
2. Obligations of the Delegating Agency
The delegating agency maintains the relationship with the owner and remains responsible for the administrative management of the mandate. It also remains the owner's primary contact, even though the delegated agency handles the marketing of the property.
3. Obligations of the Delegated Agency
The delegated agency handles the promotion of the property, manages viewings, and negotiates offers. It can use its own communication channels, networks, or tools to sell or rent the property. However, it must comply with the conditions defined in the delegation agreement, particularly regarding fees, information to be provided to the client, and confidentiality.
4. Fee Management
One of the main concerns when delegating a mandate is the issue of fee . Generally, fees are shared between the delegating agency and the delegated agency, according to the terms defined in the delegation agreement. This division can be equal or proportional to each agency's involvement in the sale or rental process.
5. Monitoring and Reporting
Although the delegated agency is responsible for marketing the property, the delegating agency must regularly monitor its progress. This includes managing reports to the property owner, providing information on viewings conducted, and presenting offers received.
Why is the Delegation of Mandate Advantageous?
1. For the Delegating Agency
Increase visibility and access to new markets
One of the main reasons a real estate agency chooses to delegate a listing is to expand the visibility of its property without having to invest in a market or geographic area where it doesn't have a strong network. For example, an agency located in a large city might choose to delegate a listing for a property located in a rural area or a remote region where it lacks the necessary expertise.
Benefit from the skills of another agency
In some cases, a delegating agency may not have the necessary expertise to manage a specific type of property. Delegating the mandate allows you to engage an agency with particular expertise in a sector or type of property, such as luxury or unique properties.
Save time
The delegation of mandate allows the delegating agency to focus on other aspects of its business while ensuring that the marketing of the property is carried out effectively by another agency.
2. For the Delegated Agency
Growing your asset portfolio
The delegated agency benefits from new properties to market, allowing it to expand its portfolio. This can be particularly advantageous if the agency specializes in certain types of properties or geographical areas.
Increase your commissions
By accepting a delegated mandate, the delegated agency has the opportunity to receive a share of the fees generated by the sale or rental of the property. Depending on the distribution defined in the contract, the delegated agency can receive a significant commission.
Strengthening one's network and reputation
Collaborating with another agency allows the delegated agency to strengthen its professional network and gain visibility, especially if the delegating agency is well established and recognized in the sector.
3. For the Property Owner
More visibility for his property
The property owner benefits from greater visibility, as several real estate agencies handle the marketing. Delegating the mandate increases the chances of finding a buyer or tenant more quickly.
Expertise and professionalism
By using a delegated agency specializing in a particular type of property, the owner can benefit from more tailored advice and more professional transaction management.
Simplified management
The owner has only one point of contact for managing the transaction, even if several agencies are involved in the sale or rental of their property. This simplifies communication and avoids any confusion.
Should the Owner be Informed of the Delegation of Mandate?
Although the delegation of mandate takes place between agencies, the question of whether the property owner should be informed is crucial. In principle, it is important for the owner to be aware of the delegation. This helps establish a relationship of transparency and trust between the delegating agency and the owner. However, how this information is communicated depends on each agency's practice. Some agencies prefer to inform their clients of the delegation from the outset, while others consider this information not necessarily essential for the owner.
Delegating mandates between real estate agencies is a common and strategic practice that maximizes the chances of selling or renting a property while optimizing agency resources. Whether it's to cover a specific geographic area, leverage particular expertise, or increase a property's visibility, this solution offers numerous advantages for all parties involved: agencies and property owners.
By fully understanding how this practice works and by respecting good collaboration practices, it is possible to establish successful partnerships between agencies, which will benefit both clients and professionals in the real estate sector.
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Read our articles in this series on Delegation of mandate between real estate agencies:
- Delegation of Mandate between Real Estate Agencies
Read the article - Understanding the Delegation of Real Estate Mandate Between Agencies
Read the article - Why Delegate a Mandate to Another Real Estate Agency?
Read the article - The Legal Framework for the Delegation of Real Estate Mandates
Read the article - The Advantages of Delegating Mandates for Agencies and Owners
Read the article - Should the Owner Be Informed About the Power of Attorney?
Read the article - How to Manage Fee Sharing in a Delegation of Mandate?
Read the article - How to Collaborate Effectively Between Agencies for a Successful Delegation of Mandate?
Read the article - Mistakes to Avoid When Delegating Mandates Between Agencies
Read the article - Key tips for a successful delegation of authority
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