What you need to know when you are buying or selling a house and what your rights are if you are not happy with the outcome.

Buying a house or selling a house is one of the largest and more complex purchases you will make. The stress and financial costs of getting it wrong can be significant. It’s important to take time to research a property if you are a buyer and to choose the right sales method if you are a seller.

You may still have to pay the agent their commission if the agency term is still current if you sell your house privately or if you cancel but the agent has done work which results in the sale of your home. 

Using a licensed real estate agent 

When you hire a real estate agent always check that they are licensed by the Real Estate Agents Authority (REAA). It is illegal to carry out real estate agency work without a licence.

You can check on the REAA’s register(external link) online to see if:

  • the real estate agent or their company is licensed
  • an agent has had any complaints upheld against them.

Real estate agency work

Real estate agents act as agents for sellers who pay them a commission plus an administration fee.

Real estate agency work includes any work done “in trade” for the seller relating to the sale, purchase or other means or acquiring or disposing of:

  • land
  • any other business, leases of land (but not residential tenancies)
  • other interests in land including occupation right agreements in retirement villages.

Common issues

Here are some common issues that arise with real estate agents:

  • not telling buyers about issues with the house that they know about or ought to have known about (based on their knowledge and experience). This is in breach of their Code of Conduct.
  • if the house doesn’t sell, usually a seller doesn’t have to pay any commission but does have to pay for expenses such as advertising and marketing.
  • pressure on sellers to agree to a price lower than they would like to close the sale.
  • not telling the buyer or the seller that they have a conflict of interest.

A conflict of interest arises where the real estate agent, or someone connected to them either:

  • owns (or part-owns) the property they are selling, or
  • is interested in buying the property.

See also:


 

Buying or selling a house privately

If you choose to buy or sell a house privately without a real estate agent being involved it’s important to get an independent valuation of the house, and to get advice from a lawyer experienced in residential property before any contracts are signed.

There are pros and cons with all sales methods, but buying or selling privately can mean that you have fewer protections under the Consumer Guarantees Act and the Fair Trading Act if things go wrong.

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.
See also:


 

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.

Contact the real estate agent first

If you are unhappy about services provided by a real estate agent by or have been misled, first try to resolve the issue directly with the real estate agent.
Read Resolve a problem to find out more.


 

Next steps

If you are unable to resolve your issue directly with the real estate agentr, our Resolve It tool has information to help you take the next steps. These may include going to the Real Estate Agents Authority, the Disputes Tribunal or District Court.

> Resolve it: Real estate agents


Private house sales

Who to contact and what happens next

If you’re dealing with a private buyer or seller and have not involved a licensed real estate agent, you will not have access to the Real Estate Agents Authority. Your first step is to try and resolve the dispute directly with the private individual or business. If you are still unable to resolve your issue, you may have to take the matter to the Disputes Tribunal or District Court.



Need more help?

Contact us for more guidance.

Common situations

Unlicensed real estate agent

Mary is thinking about selling her house. She finds a flyer from a “real estate agent” in her mailbox, so she gives him a call. He came around and met Mary and after talking to him for a while and hearing that he charged a lot less commission than other real estate agents she agreed to him selling her house on her behalf. Mary should have checked that he was a licensed agent. Dealing with an unlicensed agent meant that Mary was not protected and there is nothing that the REAA can do for Mary if something went wrong. You need to have a licence to be a real estate agent in NZ – if you don’t you are breaking the law. Always check that the agent you are dealing with is licensed on the REAA’s Public Register(external link).

Do your property checks

Harry and Sally are about to buy their first home. They had been looking for a long time and had missed out on homes they loved several times. They have just found the perfect place for them and were anxious not to miss out again so decided not to attach any conditions to their offer. To their delight their offer was accepted. However soon after they moved in, they realised that the roof leaked badly and needed to be replaced – an expensive exercise they couldn’t really afford. When they looked at the property there were no obvious signs. It’s important to check out the property you want to buy before you buy it – get a builder’s report, LIM and do a title search. It could save a lot of heartache (and expense) in the long run.

Get evidence

Joe was looking to buy a new house. He was doing the round of open homes and had a list of questions with him that he always asked the agent. One of the things he always asked the agent was where the property boundaries were. Joe successfully bought a great new property and was looking forward to building a flash new deck to get that great indoor/outdoor flow. But when he went to get consent he found out that the property boundaries were incorrect and he had less land than he thought. Joe should have asked the agent to give him evidence to back up where they said the property boundaries were. Agents are not allowed to make claims about a property that they can’t back up with evidence.

Get an independent appraisal

Susan is approached by Beth who wants to buy her house. Beth says it’s just what she’s been looking for and there is no need to involve a real estate agent, as that will just cost Susan money. Susan and Beth agree on a price, both sign a contract, and the sale goes ahead. Two weeks later Susan finds out that Beth onsold the house for a much higher value than she had originally paid for it. Susan should have got an independent valuation of her house. If she had done she would have had a better idea of how much her house was worth before selling it.