Selling
The information included here is simply a guide. It contains general information on the role of those involved in selling a property – the real estate agent and lawyer – as well as details on property valuations, ways to sell, the sale and purchase agreement and the moving day. The information is for guidance only and you should not rely on it for legal advice.
Real Estate Agent
When it comes to choosing a real estate agent we often rely on friends and family for recommendations. While this may be a good idea, it is always best to take a proactive approach before engaging a real estate agent – at the end of the day, you will be paying for their services and you need to know that what they have done for you has been in your best interest.
One way of starting is to visit open homes and actually see how the real estate salesperson operates. How actively do they sell the property? Can they easily answer even the trickiest questions posed by potential buyers? Can they identify those showing signs of interest? How did they follow up the open home?
When you have a shortlist of around three agents you need to contact them directly and understand what they have to offer. A good real estate agent should know:
The market – what houses are selling in your area and how much for
The best method of sale for your property – auction, negotiation or tender
The best way to market your property – media advertising, online marketing, open homes, flyers, professional photography
Real estate agents can specialise in particular types of property such as lifestyle, waterfront, apartment and so it is important to select a suitable agent. It is best to ask the agent some of the following questions to establish their suitability:
What qualifications do you have and how many years have you worked as a real estate salesperson?
What properties have you sold in the local area and when?
What can you tell me about the current market conditions?
How would you market my property and why?
How much would you estimate my property to sell for and how did you come to this figure?
What is your commission structure and are there any other costs involved (marketing, auctioneer fee, etc)?
What feedback can I expect during the sales process?
The real estate agent is engaged by you, the seller, and so the relationship between you and the agent is important. You need to trust the agent to best represent your home.
Under the 2008 Real Estate Agents Act, agents and salespeople are governed by a strict code of conduct. The Real Estate Agents Authority has a comprehensive website which contains a public register of all licensed real estate agents, branch managers and salespeople.
The Real Estate Agent’s Agreement
When you engage a real estate agent you will be required to sign an agreement authorising the agent to act on your behalf in the marketing and sale of your property.
Under the Real Estate Agents Act 2008, before you enter into an agreement with a real estate agent they are required to present you with the New Zealand Residential Property Agency Agreements Guide. This guide provides information about agency agreements, what to expect from your agent and what to do if there is a problem, as well as where you can get more information from.
New Zealand Residential Property Agency Agreements Guide
We recommend you download this and read it carefully.
To summarise, there are two types of agency agreements:
Sole Agency: This is where one agency (the one you have the contract with) has the exclusive right to market and arrange the sale of your property.
General Agency: This is when you are able to engage other agencies as well as market your property privately.
If signing a sole agency, you must be very aware that:
- You have until 5pm the first working day after you have been given a signed copy of the agreement to cancel the sole agency – the cancellation must be in writing, this includes fax and email.
- If you sign an agency agreement with another agent, you will be liable to pay commission to all agencies regardless of which agent actually sold your property.
- If the sole agency agreement is for more than 90 days, both you and the agent are entitled to terminate the agreement after 90 days. This termination must be in writing, including fax or email.
- In some instances, when the sole agency agreement is cancelled it becomes a general agency agreement in which case you will need to terminate the general agency agreement as well as the sole agency agreement.
- Always read the terms of the contract carefully.
- If a real estate agency carried out any agency work prior to the agreement being cancelled and that work results in the conclusion of a contract concerning a property transaction, the agency agreement will be legally binding.
We would always recommend you obtain legal advice prior to signing any agency agreement as this is a legally binding contract.
Ways to Sell
Your real estate agent will recommend the most appropriate way to market and sell your home but to assist you here we explain the three ways a home can be sold:
Offer and Negotiation: You will set either a fixed offer price, a price range or a “buyer enquiry over” price for your property. In this instance potential purchasers will have an indication of the cost of the property and will be able to present their offer. Generally offers are presented in the form of a Sale and Purchase Agreement (see below) by the real estate agent. You are entitled to accept the offer, reject it or negotiate by means of a counter offer (see below).
Auction: A day is set when an auction will be held and prospective buyers will bid against one another until the highest price is reached. Prior to the auction commencing you will need to have set a minimum price – known as a reserve price – for your property and this must be told to the auctioneer only. If bidding reaches over the reserve the property will be sold to the highest bidder and, when the hammer falls, the sale will be deemed unconditional. The buyer will pay a deposit and settlement terms set.
If your reserve price is not reached, the property is “passed in” and the auction ends. The highest bidder is then given the opportunity to negotiate with you – through your real estate agent – to see if a mutually agreeable price can be reached. Click here for a copy of the REAA’s Auctions Information Sheet.
Tender: Potential purchasers submit sealed written offers to the real estate agent by a set time and date. Buyers are not aware of what other interested parties are offering and therefore generally submit their best offer. Buyers are able to present their offer with conditions (such as securing finance etc). When the tender closes, you open the offers and decide which, if any, you wish to accept or negotiate further with the potential buyer. If you decide that none of the offers are suitable you may reject them. Click here a copy of the REAA’s Tender Factsheet.
Sale & Purchase Agreement
An offer is presented in the form of a sale and purchase agreement. This agreement details the seller’s name and the purchaser’s, the property details, purchase price, including deposit amount, and conditions. Generally the real estate agent will assist in completing the following details:
The name of the seller (vendor) and purchaser (note: a seller or purchaser can be a trust or a company)
Correct address of the property
Type of title – freehold, leasehold, unit title, cross-lease, etc
What chattels are included in the sale of the property, eg, whiteware, curtains, etc
Price
The deposit, ie, the amount that must be paid by the purchaser on acceptance of the offer
Any conditions that must be complied with, eg, finance approval, LIM report, building condition report, valuation, sale of purchaser’s house
The date the agreement will become unconditional, ie, all conditions have been satisfied
Settlement date - the date that the purchaser pays the outstanding balance of the sale price. This is generally the day that the purchaser can move into the property.
Note: We would always recommend that you have your lawyer review the sale and purchase agreement before you sign as any suggested amendments can be made then. Once you have signed the agreement it becomes a legally binding contract.
When you are presented with an offer you are able to accept, reject or counter-offer. A counter-offer is a way of negotiating, ie, you return the original offer with new terms. The buyer is also able to counter-offer any offer made by you. These negotiations are generally handled by the real estate agent.
The real estate agent must present all offers to the seller regardless of price or conditions.
When a counter-offer is presented, the original offer is legally regarded as rejected and the new offer must be agreed by the other party. It is only when both the buyer and seller have signed the agreement that the contract is formed.
The Conveyance Lawyer
A sale and purchase agreement is a legally binding contract and as such when selling a property it is important to engage a suitably qualified conveyance lawyer. Conveyance lawyers specialise in property transactions. They are responsible for providing independent advice and acting to protect your interests.
A conveyance lawyer understands the purchasing and selling process and is experienced in negotiating for buyers and sellers.
Before signing any sales and purchase agreement, or indeed negotiating any terms, we would recommend you obtain legal advice so as to avoid any potential pitfalls. See the New Zealand Law Society’s Property Law Section for further information and a list of conveyance lawyers. Alternatively download the Law Society’s Buying or Selling Property brochure (pdf 240kb).
