What is an Agency Agreement in real estate and why do you need one?
Once you decide on your real estate agent and you have made your selection via Aframe, what happens next? One of the most important aspects of your next steps your Real Estate Agent Contract or Agreement.
The most important thing to do once you have selected your real estate agent is to sign an agency agreement or other related contract. This should also be the one of the first things that your agent takes care of as it enables them to perform their duties.
Your Real Estate Agent Agreement should set out the terms of the Agent’s services and is between the home seller(s) and the agent or agency.
This guide is designed to give an overview of what should be included in a real estate agreement in New Zealand. For a comprehensive list of what an agency agreement covers and what should be in it, see the REA’s guide here: https://www.rea.govt.nz/assets/Uploads/Resources/Guides/Agency-agreement-guide.pdf
Before you sign an agency agreement
In order for you to sign the agreement, you should be clear on a number of things. Educating yourself on how an agreement works between an agent and vendor can save time and money in the long term. Because the property transaction process is so complex and the value is so high, putting in a little time upfront is highly recommended.
A few items to keep in mind when talking to your real estate agent are listed here. Your agent should provide for you;
- A clear statement of their fees and must include any rebates or discounts the agent receives.
- A marketing strategy that includes your options for sale. This could be tender, auction ect.
- An appraisal for your property. This should be realistic and supported by evidence, usually in the form of recent sales in your area
- A copy if the Residential Property Agency Agreements Guide
- A recommendation that you seek legal advice
- The agent and the vendor must both sign the agreement and the agent must present you with the singed copy within 48 hours of the agreement being signed.
- An explanation of how to make a complaint.
These items are mandated by the Real Estate Authority (REA) under the Real Estate Agents Act 2008. For any questions on what that these points mean or how they might impact you, your agent should be able to provide clarity. You can also contact the REA for guidance.
What should be in your agency agreement?
Like any other contract, an agency agreement should set out exactly what the tasks the agent will undertake and within what time frame. This includes granting authority for an agent or agency to perform tasks on your behalf and any fees and costs that apply for the duration of the agreement.
When your agent provides you with your agency agreement, make sure you thoroughly read and understand it. Check that the agreement includes things like, confirmation of the property being sold, what time period the agreement covers and the agents commission. You can also request that clauses be added for items like selling the house to someone you have already been in negotiations with.
An agent is also required to disclose any discounts or rebates that they receive in the process of selling your home. These are most often a good thing for you as a seller. It can identify that your agent has good working relationships with their suppliers and have enough experience to warrant being given a discount.
Can I negotiate with my real estate agent?
Like most other transitions in your home selling process, items in the agency agreement are negotiable. If you think an item is not fair, or if you think another agent could give you a better offer for the same service, talk to your agent. Often they are happy to negotiate.
If you would like to negotiate on your agents commission, using real estate agent finding services is often the best way. These services allow you to quickly receive multiple quotes. This allows you to see how much each agent charges and what level of service they can provide. You might find that experience comes at a higher commission cost, but the benefits can quickly stack up.
Once you have the information in front of you including multiple commission quotes, you will often find that there is no need to negotiate as the right agent tends to single themselves out with both the quality and cost.
Can I cancel my agency agreement?
If you change your mind about signing the agency agreement, you can cancel in writing by 5pm on the first working day after signing.
If you have signed a contract you should always talk to your agent and be open about your concerns.
Aframe Quote for Service
Aframe recommends you cross check the terms of the Agency Agreement or Contract with the free quote from Aframe. Just like other stages of selling your home, its important to take your time and read the fine print. Does your contract have the same commission structure from you Aframe quote? Are additional expenses and expectations outlined?
Agency Agreement FAQ
Your Real Estate Agent Agreement should set out the terms of the Agents services and is between the home seller(s) and the agent or agency.
Like other contracts, an agency agreement should be written and signed by all parties.
The end point of an agency agreement must always be set out within the agreement.