Selling your home is no walk in the park, and most people choose to sell through an agent which normally makes the process much simpler and ensures you get the best market price for your home. Using an agent will require you to sign an agency agreement. In this article, we will cover what an agency agreement is, why you must have one, what's inside the agreement and a choice you must make before signing.
Let us get started.
The agent will give you a copy of the New Zealand Residential Property Agency Agreement Guide, and you will need to offer your signature to show you have a received it. Do read it and consider seeking legal advice before signing. It is written in simple language and covers the same things like this article.
An agency agreement is a legally binding contract between a real estate agent (must hold a current licence issued by the REAA) and a client who wants to sell their home.
A real estate agent requires an agency agreement to be able to market your property with signage, online and offline advertising. The agreement includes the terms and conditions and sets out what the agent will do to sell your property, and also covers what you will pay the agent based on the agent's appraisal of the properties value. The agreement allows any agent within that company to sell your property.
Before signing the agent should have given you the following information:
The standard agency agreement appoints the agent (agency) and details what the agent is authorised to do to bring about the sale of your home.
This might cover things like:
The agreement will state if it is a 'Sole Agency' or 'General Agency' agreement. You will have to decide which one suits you best and give you the best possible sale price.
A sole agency which is also known as an exclusive means that only one agency will be allowed to market your property, effect a sale and is for a fixed length of time. The duration of the agreement will be stated in the agreement.
A general agency is where you choose to appoint several companies to sell your property. Only the company that sells the property will be entitled to receive the commission. Marketing under this agreement is normally restricted to open homes and maybe some signage.
Never sign more than one agency agreement as this may require you to pay more than one commission. (not good for you)
An agency agreement allows you to have second thoughts even after you have signed it. To cancel the agreement requires you to notify the agency in writing by 5 pm the next working day after signing.