The law requires that a salesperson carrying out agency work must be properly supervised and managed by an agent or branch manager.
This standard details guiding principles and information to assist licensees to understand how to meet their legal obligations.
REA's Supervision standard
The Real Estate Agents Act 2008 was established to protect consumers and promote public confidence in the performance of real estate agency work. Raising industry standards is an important aspect of this, and we develop and publish professional standards to support this.
Professional Standard on Supervision
All licensees holding a salesperson's class of licence must be supervised when doing real estate agency work regardless of how long they have been working in the industry.
A salesperson must be properly supervised and managed by an agent or a branch manager. Supervisors must ensure that all salespersons are complying with the Act, including employees and independent contractors.
The Professional Standard on Supervision (2017) describes best practice in the supervision of salespersons.
The following sections are described in more detail in the supervision standard document.
Supplementary Guidance: Professional Standard on Supervision
Supplementary guidance for the sector on putting the Professional Standard on Supervision (the Standard) into practice has been developed by REA and issued by the REA Registrar.
The Standard has been effective since 1 July 2017, however since its introduction, several issues in the understanding and practice of supervision have been identified.
Complaints and the annual licensee survey indicate that compliance with the Standard is mixed, with some licensees having no active supervision plans in place whereas others are operating a wide range of supervision practices. Complaints Assessment Committees have also increased their focus on the role and responsibility of the supervisor in the event of serious complaints.
This supplementary guidance from REA is designed to be read alongside the Standard, and is designed to support licensees to meet their obligations. The supplementary guidance addresses frequently asked questions and identifies common themes and provides examples of where licensees have failed to meet their supervision obligations.
Key topics within the supervision standard
Properly supervised and managed
Proper supervision and management means that sufficient direction and control is provided to the salesperson to ensure their agency work is performed competently and complies with the requirements of the Act.
Supervision is not the same as employment line management
Only a licensed agent or licensed branch manager can be a supervisor.
A salesperson’s line manager may also be their supervisor, or a salesperson may have a separate supervisor and line manager. Whatever the situation, all parties must be clear that supervision under the Act is not the same as management of an employment relationship.
Each salesperson must have a clearly defined designated supervisor or supervisors. A written supervision plan/ agreement is an effective means of ensuring a salesperson is aware of who their supervisor is and how supervision will operate.
The ultimate responsibility for supervision sits with the designated supervisor.
Actual, active and tailored to the circumstances
The nature and degree of supervision will vary from salesperson to salesperson based on their experience and competence and the operating conditions.
The frequency, mode and intensity of supervision may vary in each case. The supervisor is expected to exercise judgement that takes account of each salesperson’s experience and training, the complexities of the real estate market in which they are operating, the nature of the transactions performed and the requirements of the client or customer.
Supervisors are not expected to sight and direct every aspect of a salesperson’s real estate agency work. However, a supervisor should be actively and regularly involved with a salesperson’s activity.
Drafting sale and purchase agreements
A salesperson with less than 6 months’ real estate agency work experience cannot prepare sale and purchase agreements or provide advice to clients about their legal rights and obligations.
The supervisor should review every agreement. Supervisors must be actively involved in agreements drafted by inexperienced salespersons or those not maintaining a consistently high standard of drafting. This includes reviewing agreements before the parties sign them.
New and inexperienced salespersons
Supervisors need to take extra care when supervising a new and inexperienced salesperson.
Supervisors may change the nature and degree of supervision as a salesperson demonstrates increased competence and experience.
The law does not require a salesperson to be supervised in the presence of the supervisor. However, at all times, the salesperson needs to be under sufficient direction.
It doesn’t matter where the supervisor and salesperson are physically located — the requirement is the same. The salesperson must be ‘properly supervised and managed’, which means working under sufficient ‘direction and control’ to ensure competence and compliance with the Act.
Remote supervision is allowed, but care must be taken. More effort will be required to set up the supervision arrangement and to make the relationship work. Regular communication between the salesperson and the supervisor is imperative.
Number of salespersons that may be supervised by a supervisor
A supervisor may supervise more than one salesperson.
The number of salespeople that can be effectively supervised will depend on the supervisor’s capacity, capability and location and the level of experience and competence of each salesperson being supervised.
We recommend that supervisors keep supervision records in addition to a supervision plan and agreement. The form and extent of record-keeping should reflect the nature of the supervision.
Effective supervision is tailored to the individual. The following questions are intended to support the development of agency supervision plans:
- Do employment contracts include the details of the supervising agent or branch manager? Are these reviewed and updated as situations change?
- Do you understand the level of knowledge and the strengths and weaknesses of the people you supervise? Is your supervision plan appropriate for their level of knowledge?
- Do you have more stringent supervision for licensees new to the industry or to your organisation?
- Does your supervision plan differ for staff working remotely?
- Do you review every sale and purchase or lease agreement presented by licensees you supervise?
- Is the work of the licensees you supervise randomly reviewed and recorded?
- Do the people you supervise have a training and development plan? Are the outcomes of these plans recorded in writing?
There are restrictions placed on newly licensed salespersons during their first 6 months. Below we outline what they can do, how to supervise them and your supervision obligations under the Real Estate Agents Act 2008.
Understanding the need for supervision
Under the Act, a salesperson must be properly supervised and managed by an agent or a branch manager when they carry out agency work.
This means that supervisors must exercise enough direction and control to ensure that the salesperson is competent and complies with the requirements of the Act.
Salespersons must be supervised whether they are engaged as an employee or an independent contractor. Agents who engage a salesperson as an independent contractor are liable for the acts and omissions of the salesperson in the same manner and to the same extent as if they were an employee.
Other steps that supervisors should take with a new salesperson include:
- checking before the new salesperson runs open homes to ensure that they are knowledgeable about the property and have information on hand to assist buyers
- having regular one-on-one meetings to go through any questions or problems
- sitting in on phone and face-to-face conversations to observe how they interact with clients and buyers.
When you are satisfied that a new licensee is conducting real estate agency work on your behalf in a competent and legal manner, you can relax your supervision.
6-month sale and purchase agreement prohibition
The Lawyers and Conveyancers Act 2006 does not allow licensees who hold a salesperson's licence to prepare sale and purchase agreements or give advice about them until they have had at least 6 months' experience as a salesperson.
This means that a newly licensed salesperson can’t prepare sale and purchase agreements or advise clients or customers about legal rights and obligations that are incidental to preparing these agreements. When the new salesperson has had 6 months of real estate agency work experience, this prohibition is lifted.
Note that working as a personal assistant in real estate or as a residential property manager does not count towards real estate experience. Only experience as a salesperson (or higher-level licence class) counts towards real estate agency work experience as a licensee under the Act.
What can a new salesperson do?
Newly licensed salespersons can do other real estate agency work during their first 6 months, including:
- signing up clients on behalf of their agent (obtaining listing agreements)
- marketing activities
- undertaking comparative market analysis and providing appraisals for prospective clients
- conducting open homes and doing follow-up calls
- building a prospects database.
Before allowing a salesperson to carry out real estate agency work, you need to be satisfied that they can carry out this work competently, and you’ll need to ensure that you can properly supervise and manage this work.
Preparing sale and purchase agreements
As the supervisor for a new salesperson, you will need to prepare any agreement for sale and purchase and give any advice about legal rights and obligations to clients and customers.
Having the new salesperson observe your contractual discussions with clients and customers is a good way to demonstrate best practice.
The Act does not require salespersons to be supervised physically. If you can properly supervise and manage them, remote management is possible.
For example, open homes can be conducted by a salesperson without the branch manager or agent being physically present. You should be available to deal with any situations that may arise that the salesperson may not be equipped or experienced to deal with.
Regular in-house staff training should be provided to ensure there are sufficient protocols and guidance to assist salespersons to deal with difficult situations.