Know your rights when dealing with licensed real estate agents
You have special rights when dealing with real estate agents under the Real Estate Agents Act(external link) (REAA). This sets out the licensing process for real estate agents, industry standards and the disciplinary process.
Real estate agents have to follow the REAA’s Code of Professional Conduct and Client Care (.pdf 529KB).
“When buying or selling a property be informed – find out how it all works, what you need to do, and what you can expect from your real estate agent.”
All agents must be licensed by the Real Estate Agents Authority (REAA), an independent government body. Check the REAA’s online register(external link) and report any unlicensed agents to the REAA as this is illegal.
Unsatisfactory conduct by a real estate agent includes any work that falls short of the standard that you would reasonably expect from a reasonably competent licensed real estate agent. You can complain to the REAA about this conduct.
You also have consumer rights as a seller of residential property under the Consumer Guarantees Act. The real estate agent’s services must:
- be done with reasonable care and skill
- meet any specific purpose you tell the agent
- are delivered in a timely way
- be reasonable priced, if not agreed beforehand.
You also have rights as a buyer or seller under the Fair Trading Act for the real estate agent not to:
- mislead you or give false information in any statements, conduct or advertising.
- use unfair sales practices
- include any unfair contract terms.
You can claim money (damages) or other remedies if their advice leads to problems. What kind or remedy or how much compensation will depend upon the nature and seriousness of the problems.
Code of Conduct
Real estate agents must follow the REAA’s standards set out in the Code of Professional Conduct and Client Care (529KB PDF)(external link) including:
- act in the best interests of the seller and comply with their instructions unless illegal
- treat buyers fairly
- not put buyers or sellers under undue or unfair pressure
- keeping both parties regularly updated on any relevant matters
- not withhold or give information that is inaccurate about a property to a buyer
- not make statements they can’t prove with evidence
- mislead buyers about the seller’s pricing expectations
- avoid conflicts of interest.
See the REAA website for information on Conflicts of interest(external link)
Conflicts of interest
Real estate agents can’t be involved directly or through someone they know, as a purchaser or seller of property for which he/she is an agent for, without the seller’s written consent. They must also give you an independent registered valuation of the property at their own expense, either before you consent or within 14 days of getting your consent.
If they don’t get your written consent or a valuation, you can cancel the contract and/or recover any commission paid. Real estate agents must also tell any buyers about any possible conflicts of interest in writing.
Agents must tell you in writing if they receive any advertising rebates, discounts or commission. If they dont tell you, you don’t have to pay these expenses.
Selling a house with a licensed real estate agent
Agency agreements and agreements vary with different real estate agencies. Choose an agency that uses the REAA’s recommended standard clauses. They help protect you by giving certainty about when an agency agreement ends and when a commission needs to be paid.
Find out more about these standard clauses and what real estate agencies are using them on the REAA’s website(external link).
Most agents use the sale and purchase agreement from the Auckland District Law Society and the Real Estate Institute of New Zealand.
Remember you can negotiate terms and conditions in both of these agreements. Make sure you read and understand them before you sign them as they are legally binding contracts. It is also a good idea to get your lawyer to look at them.
For more information read the following from the REAA:
What information real estate agents must give to sellers
Before you sign an agency agreement a real estate agent must tell or give you:
They must also explain marketing and advertising packages (paid up front usually).
Cancelling an agency contract and cooling off periods
You may cancel a sole agency agreement by written notice, if you change your mind:
- • by 5pm on the next working day after you have been given a copy of the agency agreement
- • after 90 days where the agency is for a term longer than 90 days.
Buying a house from a licensed real estate agent
Remember a real estate agent acts for the vendor, but they must treat the buyer fairly. Real estate agents can’t:
- withhold any information that they know (or should know) that is relevant to your enquiry
- make statements that are misleading or can’t be backed up with evidence.
Ask the real estate agent or the vendor about possible issues depending on the age of the house such as:
- weather tightness (leaky homes)
- the condition of the plumbing, eg dux quest plumbing or black plastic piping that fails and will need removal and replacement,
- wiring or electrical issues (needs rewiring)
- possible drugs contamination, eg “P” or methamphetamine or other drugs
- any restrictions on the title
- any renovations have the appropriate consents.
Keep a copy of their answers in writing or print out any emails just in case you have issues further down the track after purchasing a property.
Get legal advice and add any conditions before you sign the agreement for sale and purchase – it is too late to do this once the agreement is signed. Common conditions include:
- a builder’s report
- registered valuation
- Land Information Memorandum (LIM) report
- Title search.
For more information read the following from the REAA:
Private house sales
If you decide to sell your house privately you won’t have the guidance of a professional to ensure the correct process is followed to get the best outcome, so be aware of the potential pitfalls before you start.
If you are selling your own house you should:
- Get an independent valuation so you know what your house is worth
- Talk to a licensed agent and ask them to give you a valuation
- Involve knowledgeable friends or family in the process
- Find out who the actual buyer is before you accept any offers
- Find out what the process is if something goes wrong
- Be wary of unrealistic offers or claims
- Make sure you have disclosed any information that could be relevant to a buyer
- Make sure you don’t sign anything unless your lawyer has reviewed and approved it
- Take your time and not feel pressured into closing a sale quickly.
Find out about selling a house privately on the CAB website(external link).
Find out about buying a house privately on the NZ Government website(external link).
Your rights if something goes wrong with a private sale:
Consumer laws such as the Fair Trading Act or Consumer Guarantees Act may apply if professional property investors or developers are engaging in misleading or deceptive conduct when dealing with you on a house sale.