Property
Real estate agents
Introduction
Traditional agents still dominate when it comes to selling houses. But there are other options.
We look at what to expect when you use traditional real estate agents, low-commission real estate agents, lawyer-realtors and property websites to sell your home.
We also report on the results of our latest survey of real estate agents' fees.
Consumer protection
The real estate industry has undergone a much-needed legislative overhaul. The main changes are:
- Anyone who carries out "real estate agency work" must be licensed by the new independent regulatory body, the Real Estate Agents Authority (REAA). It also investigates concerns about agents' behaviour.
- A public register lists all agents – and notes whether they've been disciplined in the last 3 years.
- There’s greater disclosure required about conflicts of interest and the estimated size of commissions.
- A Real Estate Disciplinary Tribunal deals with serious misconduct.
- Higher fines and tougher penalties for misconduct have been introduced. Complaints Assessment Committees can fine an agent up to $10,000; if the case goes to the tribunal, the fine can be up to $15,000. The tribunal can also award up to $100,000 compensation to clients, and cancel or suspend an agent’s licence.
All agents must have their own complaints process. If a complaint can’t be resolved at that level, the REAA is the next step.
The REAA has received 1061 complaints between November 2009, when it began, and 30 June 2011. Over a third of these are for "incompetency or negligence" or "misrepresentation". Just over 100 cases of unsatisfactory conduct have been proven and 27 charges laid with the disciplinary tribunal. Many of the other complaints have been minor and easily resolved. The large volume of complaints received by the REAA was one of the reasons agents' levies increased by 50 percent.
The REAA has now streamlined its procedures to achieve compliance through advice and mediation, backed up by investigation and enforcement when necessary. This reduces the number of complaints being referred to formal investigation.
Older complaints
Complaints about deals completed before 17 November 2009 (when the new Act came into force) that haven’t been resolved can still be considered by the REAA. But the complaint can only be about something that could have been considered under the previous Act – and any disciplinary action is limited to what could be ordered under that Act.
Types of contract
Sole agency
A sole agency is the most common type of real estate contract. It gives your agent the exclusive right to sell your house – usually for a period of 90 days. But make sure you understand what’s in the contract: agents can claim a commission if the house is sold (by anyone) at any time during the sole agency and sometimes even if it’s sold after the sole agency has ended.
You may want the option of selling the house yourself, so you’d need to include a clause in the contract that allows this. But the agent may still be able to earn a commission if they can prove the sale resulted from their advertising or marketing.
You should be careful if you’ve cancelled a sole agency and then entered into a general listing with another agent whose prospective buyer first saw the property during the sole agency. Take some legal advice before signing the sale contract to make sure you don’t pay commission to both agents.
Also check what the agreement says about cancelling. Usually a sole agency agreement converts to a general listing when the sole agency ends. If you want to end the listing entirely you’ll need to give notice of cancellation – usually 7 days.
General listing
A general listing is when you list your property with several agencies but only pay a commission to the one that sells it. This is less restrictive – but agents won’t be as motivated to sell your property. Just over 10 percent of the agents we surveyed didn’t do general listings.
Auctions and private tenders
These are other methods frequently used by agents to sell houses.
In an auction, potential buyers bid against each other for the property on a set date. Auctions can be useful for houses that are unusual or difficult to price.
In a tender, the property has no listed price. But there’s a set date for written offers – which are confidential until they’re opened in the presence of the seller (or the seller’s representative).
There’s debate about whether auctions and tenders benefit the buyer or the seller – but you’re more likely to find them in a sellers’ market rather than the current buyers’ market.
The legal bits
Conveyancing no longer has to be performed by lawyers – and there are now specialist conveyancing firms in most main centres.
You could compare the conveyancing fee from one of these specialists with that from a law firm. The conveyancing services offered are similar.