What is a real estate agency agreement in New Zealand?

​What Is a Real Estate Agency Agreement and What Does It Mean?
The agency agreement is the contract between you and your real estate agent. Understanding it before signing is essential. Here is the complete guide.

What an agency agreement is
A real estate agency agreement is a legally binding contract that appoints a real estate agent (and their agency) to act on your behalf in selling your property. It establishes the terms of the relationship: the period of agency, the commission rate, the marketing arrangements, the agent’s obligations to you, and the conditions under which commission is payable.

Types of agency agreement
In New Zealand, there are two main types of residential real estate agency agreement. General agency: allows you to appoint multiple agents simultaneously and only pay commission to the agent who actually sells the property.
Sole agency (also called exclusive agency): appoints only one agent for the specified period. Most New Zealand residential sales are conducted under sole agency agreements, which give the agent the exclusive right to market and sell the property during the agency period.

The agency period
The agency agreement specifies the period during which the agency is in effect.
For sole agency agreements, the standard period is 90 days (though most listings are settled well before this). After the initial period, the agency typically converts to a general agency unless renewed. You can request a shorter initial period (30 to 60 days) and renew if needed.

Commission payable even if you find the buyer
Under a sole agency agreement, the agency is entitled to commission if the property sells to any buyer during the agency period, including one you find yourself. The commission protection clause means that if a buyer who visited your open home contacts you directly to purchase without going through the agent, the agent may still be entitled to commission on the basis that they introduced the buyer to the property.

Your rights and the cooling-off period
New Zealand’s Real Estate Agents Act 2008 requires agents to provide a written agency agreement before any selling activity commences. You are entitled to seek legal advice on the agreement before signing. Once signed, there is no automatic cooling-off period for agency agreements, so review carefully before signing.
Your lawyer can review the agreement, a worthwhile investment on a significant transaction.

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Paul Sumich is a Whangarei-based real estate professional with local Northland expertise. Find more at paulsumich.co.nz/blog