When you enter into an agency agreement with someone who is selling a property, you need to meet a number of requirements that are set out in the Real Estate Agents Act 2008 and the Code of Professional Conduct and Client Care 2012.
Before you can receive a commission or expenses
- The work must be done under a written agency agreement.
- The agency agreement must be signed by or on behalf of the seller and the agent.
- A copy of the agency agreement must be given to the seller within 48 hours of it having been signed by or on behalf of the seller.
Before the seller signs the agreement
Before the seller signs the agency agreement, there are several things you must do:
Explain the risk of paying a commission if a previous agency is not cancelled
You need to warn the seller they could be at risk of paying two commissions if the buyer has been previously introduced by another agent or if they have an existing agency agreement that has not been cancelled. You must also warn them that if they cancel the agency agreement with you, and then sell privately to a person introduced by you, they may still be liable to pay a commission.
Provide a written price appraisal of the property
This is your estimate of the sale price of the property. It must realistically reflect market conditions and be supported by comparable information on sales of similar properties. This applies to all transactions, including commercial leases. If it is not possible to provide comparable information, you should say so in the appraisal.
Discuss the different options for selling the property
Explain the options, for instance, by tender, auction or at an advertised price. You must also explain that how they choose to sell their property can impact on the benefits you receive.
Provide a clear written estimate of your commission
This should explain how your commission will be calculated, the conditions under which it must be paid and the estimated total sum they will pay based on the estimated sale price.
Provide a copy of the agency agreement guide (if it's a residential sale)
You must give the seller a copy of the New Zealand Residential Property Agency Agreement Guide [PDF, 2.2 MB] before they sign the agreement and ask them to confirm in writing that they have received it.
Explain marketing and advertising costs
You must explain how the property will be marketed and advertised. Make it clear what advertising you provide as part of your service and what they would be charged extra for if they choose to have it.
Disclose rebates, discounts and commissions
You must include a statement about any rebates, discounts or commission you will receive and specify the amount. You can use the agent's statement relating to rebates [PDF, 223 KB] form for this.
You are not entitled to receive any expenses from a seller if this information is not included in the agency agreement.
Inform the seller if you have a conflict of interest
If you have a conflict of interest, for example, if you or someone connected to you is interested in buying the property, you must inform the seller and follow the prescribed process.
Read more about conflict of interest here.
Recommend that the seller seeks legal and other advice before signing
You must recommend that the seller seeks their own legal advice, and give them a reasonable amount of time to do this before signing the agency agreement. Make sure they are aware they can and may need to seek technical or other advice and information.
Explain to the seller when the agency agreement will end
You must explain either when the agency agreement ends, or how the seller can cancel it.
Provide information about how to make a complaint
You must explain that your agency has an internal complaints procedure for dealing with complaints and that the seller may complain to the REA without first using your in-house complaint process.
Cancelling agency agreements
When an agency agreement is cancelled, you must give the seller the names of any potential buyers that if they purchase the property, may result in you being entitled to a commission.
This applies even if you are using the standard clauses for residential or rural agency agreements.
Cancelling sole agency agreements
The 5pm window for cancelling a sole agency agreement
If the seller changes their mind after signing a sole agency agreement, they can cancel it (in writing, by letter, fax or email to you) by 5pm on the first working day after they have been given a copy of the agreement.
However, if you carry out any work before the agreement is cancelled that results in the sale of the property, the terms of the agency agreement will be legally binding.
Cancelling a sole agency agreement after 90 days
If the sole agency agreement is for a residential property and for a term longer than 90 days, you or the seller can cancel the agreement any time after 90 days.