Real Estate Brokerage: Why Sign a Mandate?

You are about to embark on a real estate investment and wish to use a real estate broker? You will therefore probably sign a mandate contract.

What is a mandate contract?

The mandate contract is a legal document that authorises a third party to carry out certain actions on your behalf. In the context of real estate brokerage, you are therefore the principal who grants your real estate broker (the agent) the right to represent you before banks for your credit search. By signing this mandatory and official document of representation, you gain security, because the scope of representation for which you engage your real estate broker is clearly defined and formalised.

What content must be included in the real estate broker’s mandate contract?

The real estate broker’s mandate has only one purpose: to give this professional the mission of finding the best loan conditions for your real estate project. To do this, it must contain the following details:

• The clear definition of the mission
• Detailed fees with brokerage costs. Generally, this is a percentage of the capital you need for your investment.
• Its affiliation with a particular financial institution, or its exclusivity contract for collaboration with a specific bank.

In terms of format, the mandate contract can be signed physically face-to-face, or online, for a fully virtual accompaniment. For example, the Pretto website is a pioneer of this 100% digital service. In the case of real estate brokerage via a digital platform, the mandate is signed using an electronic signature. To do this, you need to sign by hand on a blank piece of paper, scan it and place it on the section intended for this mention in the electronic contract. The electronic signature has the same value as a manual signature if it is authenticated as matching the one on your identity documents.

What about the content of the mandate for 100% online brokerage?

We have examined for you the contract of a digital brokerage platform: Pretto. The information is transparent. Here are the details:

• A reminder of the platform’s legal notices.
• A detailed explanation of the contract’s objective regarding the services performed by Pretto for this brokerage operation. There is also a mention of the cost of the broker’s service. To our great surprise: it is half the price of traditional brokerage fees.
• The principal’s obligations: notably the submission of documents and information for the file, the principal’s solvency with the Banque de France.
• The agent’s obligations: the study of several credit proposals, the support of the file and negotiation with financial institutions.
• The platform’s presentation shows its autonomy from the banks.
• The detailed remuneration is under 1%, which comes not from the principal, but from the lending bank.
• The protection of sensitive information.
• The alternatives for complaints or recourse in the event of a dispute.

The mandate is mandatory for a real estate brokerage service

Beyond the fact that the mandate provides you with security regarding the proper completion of the brokerage mission, its signature is also mandatory, because, in carrying out their tasks, the real estate broker submits your confidential documents and sensitive information to the financial institutions they contact. Indeed, when compiling your loan file, you will give them your identity documents, and all information about your private and financial life. In order to protect you, the mandate is essential. The broker must also request your authorisation to use these documents.

What do you commit to when signing the real estate brokerage mandate?

Signing a mandate contract means you are charging the broker with a mortgage research mission in your name.

However, be aware that you always have the right to conduct your own research. If you opt for this approach, it is necessary to discuss it with your broker, because the rate negotiations they establish with the banking establishments you contact personally will be unsuccessful.

You also have the possibility of using another broker. However, this is certainly not the best move since they will compete with each other rather than help each other. The rates you obtain will therefore not be better.

It is important to understand that the brokerage contract does not commit you to paying any fees to your agent if they are not the source of the best mortgage conditions you have obtained and wish to subscribe to.

Moreover, Article L321-2 of the Consumer Code states that agents cannot demand any payment from the principal before the signing of the credit contract.