When entering into an agency agreement with someone who is selling a property you are required to meet a number of requirements, including disclosure of information, 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
As a licensee you have to meet these requirements before you can receive commission or expenses for real estate agency work carried out:
- The work must be done under a written agency agreement
- The agency agreement must be signed by, or on behalf of, the client and the agent
- A copy of the agency agreement must be given to the client within 48 hours of it having been signed by, or on behalf, of the client
Before the seller signs the agreement
Before the seller signs the agency agreement you must provide them with a range of information.
You must explain the risk of paying a commission if a previous agency is not cancelled
You must warn them that they could be at risk of paying two commissions if the purchaser 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 will still be liable to pay a commission.
You must provide a written price appraisal of their property
This is your estimate of the sale price of their property and 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.
If there is no comparable or semi-comparable sales data to base an appraisal on, you must explain this in writing.
You must discuss the different options for selling their property
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.
You must give them 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.
If it is a residential transaction – you must give them a copy of the Agency Agreement Approved Guide
You must explain marketing and advertising costs
You should explain how the property will be marketed and advertised and 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.
You must disclose rebates, discounts and commissions
You are not entitled to receive any expenses from a client if this information is not included in the agency agreement.
You must inform the seller if you have a conflict of interest
If you have a conflict of interest – for instance if you or someone connected to you is interested in buying the property – you must inform the seller and follow the prescribed process.
You must recommend that the seller seeks legal and other advice before signing
You must recommend they seek their own legal advice and give them a reasonable amount of time to do this before signing the agency agreement. You must ensure they are aware they can and may need to seek technical or other advice and information.
You must explain to the seller when the agency agreement will end
You must explain either when the agency agreement ends or how they can cancel it
You must inform them about your internal complaints procedure and the REAA's complaints procedure
You must explain that your agency has an internal complaints procedure for dealing with complaints and that they may complain to the REAA without first using your in-house complaint process.
Cancelling agency agreements
When an agency agreement is cancelled you must give the seller a list of customers who, if they sell to, may entitle you to a commission.
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 then 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 after 90 days or at any time after that.
More information on agency agreements