Property transactions can be both financially demanding and time consuming, as demonstrated by Real Estate Institute of New Zealand (REINZ) statistics showing that the median residential property price in New Zealand in September 2017 was $525,000, taking a median 34 days to sell.
Embarking on transactions of such scale, in which a range of steps will need to be taken and a variety of processes observed, many people seeking to sell their home feel more comfortable in opting to engage an agent.
Of course, buying or selling a home without an agent is an option, and it is worthwhile considering the pros and cons of both options before committing one way or another, especially for sellers, who should acquaint themselves with everything that the process involves.
The value of using a real estate agent lies in ensuring that a property is effectively marketed and that all the correct processes are observed, however it is important to ensure that you feel you are getting value for money when it comes to paying commission.
So, what are some of these services that real estate agents provide and what should you look for when engaging an agent?
What qualifications do real estate agents need?
There are a number of regulations governing real estate agents in New Zealand, determining who can operate as an agent. As advised by the Real Estate Agents Authority (REAA), accepting lawyers and licensed auctioneers, to undertake real estate work in New Zealand it is necessary to be licensed by the REAA under the Real Estate Agents Act 2008.
Before applying for a licence, applicants will need to have the required qualifications, either as a salesperson, individual agent or branch manager, as set out by the Real Estate Agents Licensing Regulations 2009, along with meeting other requirements.
The REAA advises that via its website users can search its public register of all licensed real estate agents, salespeople, branch managers and companies to access the following information:
- Find contact details.
- Check that who you’re dealing with is licensed.
- See if they’ve had any complaints upheld against them in the last three years.
The REAA reported that as of September 30, 2017 there were 15,869 active license numbers in New Zealand, comprising 12,681 salespeople, 1,888 agents, 386 branch managers and 914 companies.
First point of contact
Real estate agents act as an intermediary between buyers and sellers – they are the first point of contact, and the more established or specialised an agent’s network, the greater the likelihood of striking the deal that you are looking for.
Sellers should look to engage an agent who they feel comfortable with and who they believe has the right network and structures in place to effectively market their property to buyers.
The REAA advises that sellers choosing to list their property with one agency will usually sign a sole agency agreement, and with two or more agencies a general agency agreement.
Prior to signing an agreement, the REAA advises that a salesperson must:
- Provide a written estimate of the sale price, reflecting market conditions and supported by information about sales of similar properties.
- Discuss the different sales methods – with property owners having the choice of selling at an advertised price, by tender, auction or deadline sale – providing information as to how the option chosen will affect the commission paid.
- Provide a written estimate of the commission, and explain how it will be calculated and when it must be paid.
- Provide a copy of the New Zealand Residential Property Agency Agreement Guide.
- Explain how they’ll market the property and how much it will cost.
- Explain the risk of paying two commissions – a risk if more than one agency agreement is entered into.
- Provide the opportunity to seek legal advice before signing an agreement.
For buyers, meanwhile, it is important to keep in mind that the real estate agent is ultimately a representative of the seller.
“However friendly and helpful the salesperson is, they represent the seller,” the REAA advises. “The salesperson must not mislead buyers, but you should not rely only on the salesperson for advice or assistance.”
Marketing is, of course, a key skill of real estate agents, with it important to keep in mind the reach and network of an agent and their ability to focus on the right areas of the market.
As a seller, you will want your property to not only reach as many potential buyers as possible, but to also reach more of the buyers likely to be interested, and it is important that your property is properly promoted in gaining the best price.
As part of the marketing process, a real estate agent will be able draw on their knowledge of market conditions and current trends, providing information on price expectations and helping to determine what sort of a price should be set.
The marketing process will typically involve a number of channels, as the agent seeks to generate maximum interest – from the signs placed at the front of houses, to promotion of the property through a range of print and online channels.
Negotiation and settlement
Real estate agents also act as negotiators in seeing the sales process through to settlement, communicating the intentions of buyers and sellers, and will help facilitate completion of the necessary legal procedures and paperwork.
The REAA advises that when a buyer wants to make an offer, the agent will draw up a legally binding sale and purchase agreement, presenting the offer to the seller. Throughout the process of the seller considering the offer, the property will remain available for sale to others.
Conditions may be attached to the offer that must be met before the agreement goes unconditional and the sale takes place, such as the buyer stipulating the offer is subject to he/she selling their own property or a property condition report being carried out, with it also possible to amend the agreement.
The agent will oversee this process through to a final agreement being reached, leading to completion of the sale.
The REAA advises that once an agreement has been reached, the buyer and seller will be asked to sign the legally binding final version of the sale and purchase agreement, specifying a settlement date, which is typically also the possession date.