Real estate watchdog recommends new clauses for agency agreements to protect sellers

The Real Estate Agents Authority (REAA) is recommending real estate agents selling residential property use new standard clauses in their terms and conditions to better protect consumers.

The new standard clauses were developed jointly by the REAA and the Real Estate Institute of New Zealand (REINZ) to create more certainty about when an agency agreement ends and which agent can claim a commission when sellers change real estate agencies.

“If a seller decides to change real estate agents, it’s not always certain which agent is owed a commission when the property sells. This can cause confusion and lead to disagreements and complaints to both the REAA and REINZ”, said Kevin Lampen-Smith, Chief Executive of the REAA.

According to an REAA survey of agency owners and branch managers in June this year:
  • About two-thirds (67%) reported dealing with a commission-related disagreement or dispute with another agency in the past five years.
  • A significant amount of disputes were left unresolved.
  • Many (62%) wanted some support or guidance from the REAA to prevent these issues from happening.
“Disagreements over commissions between real estate agencies unfortunately occur too often. If it’s clear that just one agency is entitled to a commission it will make things simpler and more straightforward for​ both the agent and the seller. 

“We want to avoid sellers getting any nasty surprises like being asked to pay two agents’ commissions. This could leave them thousands of dollars out of pocket. These standard clauses will make things much clearer and help ensure that the buying and selling process goes as smoothly as possible”, said Mr Lampen-Smith.

While these clauses are voluntary the REAA recommends that sellers wishing to sell their residential property use real estate agencies that include these standard clauses. The REAA is publishing a list of these agencies on their website.

Key aspects of the standard clauses include:
  • ​Only one agent can claim a commission, and only when the buyer and seller have signed a sale and purchase agreement (even with conditions) at the time that the agent is acting for the seller.
  • If the seller cancels their contract with the agent and then sells privately to a buyer previously introduced, the agent can only claim a commission for six months after the contract ended.
More information is available on the REAA website including:

Dan Ormond
027 251 9849