Working with a real estate agent

28/04/2017

​We’re getting ready to sell our house. What do we need to know about working with a real estate agent?


If you’re looking to sell what is likely to be your biggest asset, it makes sense to get help. Before you approach an agent or agency about selling your property, I recommend reading the New Zealand Residential Property Agency Agreement Guide. This guide, which is available online (details below) and from real estate agencies, covers all you need to know about the process. Agents must give you a copy of this guide before you start working with them.

In New Zealand, it’s illegal to carry out real estate agency work without a licence. Licensed real estate agents must comply with the rules of the Real Estate Agents Act (2008). The REAA has an online public register where you can look up an agent, check that they hold a current licence and find out if they have had any complaints upheld against them. Working with a licensed agent gives you security - if you choose an unlicensed person to sell your home, you do not have the same recourse to assistance if things go wrong.

When you decide to work with a particular agent or agency, you will be asked to sign an agency agreement. This is the cornerstone of your contract with them – it’s a legal document that sets out what the sale process will be and how much commission the agent will receive if the property sells. It also covers matters such as the agreement’s timeframe, how the property will be marketed and what the costs of that will be. 

You can list your property with one agency in a sole agency agreement, or two or more in a general agency agreement. As the name suggests, a sole agency agreement gives one agent or agency the exclusive right to market and arrange the sale of your property. If you sign a sole agency agreement, you should not sign an agreement with any other agent or you may have to pay all the agencies a commission regardless of which one arranged the sale. 

Whatever you decide on, it’s important to remember that all the conditions in agency agreements are negotiable. It can be useful to get legal advice to help you understand what the terms of an agreement mean, and to ensure you get what you want.

Before you sign an agency agreement, the agent has to give you a written price appraisal. This is their estimate of the property’s sale price, which must realistically reflect market conditions and comparable sales data. The agent must also explain the different options for selling your property, whether by tender, auction or at an advertised price. They must explain how your property will be marketed, and make it clear what advertising they provide as part of their service and what you will need to pay extra for.

Agents are paid on commission. Some firms offer fixed fees, but other commission arrangements are negotiable. Before you sign an agency agreement, the agent must explain to you how the commission will be calculated, the conditions under which it must be paid, when it must be paid and the estimated total amount you will pay based on the estimated sale price of your property. Commission is usually made up of a set amount, plus a percentage of the selling price and GST. You can negotiate this with the agent, but make sure any changes are reflected in the agency agreement before you sign it. 

Agents are not allowed to exert undue or unfair pressure on a seller and they must keep you updated about anything relevant to the sale of your property. If they, or someone they know, are interested in buying your property, this conflict of interest must be declared. In this situation, we recommend that you ask another agent to represent you. It’s important that you have someone independent working to sell your property, especially when you’re paying them to do it.

Kevin Lampen-Smith is the chief executive of the Real Estate Agents Authority (REAA), the independent government agency that regulates the New Zealand real estate industry. If you have a question about buying or selling property, send it to ​info@reaa.govt.nz​​

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