Sole or general agency agreement?

DON’T SIGN a sole agency agreement if you want to list your home with more than one real estate agent.

An agency agreement is a legal document that sets out what the sale process will be and how much commission the agency will earn if the property sells.

“It also covers matters such as the agreement’s timeframe, how the property will be marketed and what the costs of that will be,” Real Estate Authority chief executive Kevin Lampen-Smith says.

“You can list your property with one agency under a sole agency agreement, or two or more under a general agency agreement.

“As the name suggests, a sole agency agreement gives one agent or agency the exclusive right to market and arrange the sale of your property.

“If you sign a sole agency agreement, you should not sign an agreement with any other agent or agency - or you may have to pay all the agencies a commission regardless of which one arranged the sale.”

Lampen-Smith recommends consulting a lawyer before signing any agreement.

“It is always advisable to get legal advice to help you understand what the terms of an agreement mean and to ensure you get what you want before you sign it.”

He says an agent must provide a written appraisal of your home before asking you to sign an agency agreement.

“This is their estimate of the property’s sale price, which must realistically reflect current market conditions and refer to comparable sales data.”

The agent also should outline the different options for selling your property, whether by tender, auction or at an advertised price.

“They must explain how your property will be marketed and make it clear what advertising they provide as part of their service and what you will need to pay extra for,” Lampen-Smith says.

“Whatever you decide, it’s important to remember that many of the conditions in agency agreements are negotiable.”

Agents are most commonly paid commission. Some firms offer fixed fees, but other commission arrangements are negotiable.

“Before you sign an agency agreement, the agent must explain to you how the commission will be calculated, the conditions under which it must be paid, when it must be paid and the estimated total amount you will pay based on the estimated sale price of your property,” Lampen-Smith says.

“The commission is usually made up of a set amount, plus a percentage of the selling price and gst. An administration fee is also usually included.

“You can often negotiate commission fees with the agent, but make sure any changes are reflected in the agency agreement before you sign it.”

For independent guidance check out www.settled.govt.nz