When selling a house, we explain why real estate contracts and agreements are an important part of the process for you to understand. If you need help, download free The Process Of Selling A House - it will make it much easier for you.
Before you sign any contract on the dotted line, to help you out, we have put together a list with a brief overview of what real estate contracts are required and the purpose of each one.
The Real Estate Agency Contract Explained
The Agency Agreement for Selling A House - Referred to as a Real Estate Agency Agreement by the NZ Real Estate Authority or Listing Authority, this is the form you sign with a real estate agent authorising them to list and sell your home. Make sure you use a competent real estate agent because your whole real estate experience and the end result including your sale price, will depend on that decision.
The real estate agency contract you sign is with the company, not an individual real estate agent. If you sign an agency contract then regret your decision, you have until 5pm of the following business day after you have received a signed copy of the agreement, to back out of this (in writing).
A real estate agent must have provided you with a written appraisal of your property, prior to signing the agency contract. It is important you read, understand and agree with everything in the real estate appraisal because it will influence subsequent decisions to be made about selling your house.
- There are two types of agency agreement. General or Sole Agency Agreements and there a number of pros and cons to consider.
- There are Rural Agency Agreements and Residential Agency Agreements. Double check this if you have a lifestyle block because the commission charged can differ from a rural agency agreement.
Real Estate Commission Clauses - The Real Estate Authority has developed and recommends all sellers use their 'standard clauses' for either residential or rural properties. These clauses provide you with added protection around commission payments down the track.
Other clauses added to any documents will require your authorisation and signature. If you are requested to sign a legally binding document and an agreed clause is missing, don't sign it until it's attached.
Other Real Estate Contracts That Require Your Signature
Real Estate Marketing Contract - Once you have agreed on your real estate marketing plan and associated advertising costs with your agent, they are required to get your signature authorising them to proceed with it. Real estate agents are also required under the Real Estate Agents Act 2008 to get your authority to make any changes to the marketing contract and you must sign any amendments made. This may seem arduous at times but a small detail like this can make the relationship with your real estate agent quickly go sour if they get it wrong.
Real Estate Auction Authority Form - A real estate company auctioneer will often visit you prior to the auction date to discuss how the auction process works and the reserve price. Auctions involve a fee and you will need to sign an Auction Authority Form giving the company consent to proceed with the auction. A real estate agent is obliged to explain all the methods of sale to you prior to choosing which method of sale is best.
Particulars and Conditions of Sale by Tender - Should you decide to sell your house or any other property type by tender, your signature will be required to authorise this by signing the relevant tender contract documentation. Your real estate agent will provide this.
Real Estate Sale and Purchase Contract - Used firstly by a buyer making an offer to purchase a property. This contract is almost always completed by a real estate agent. If you are a buyer, be aware that it may or may not be the real estate agent who signed the real estate agency contract with the seller and it pays to know this because if you are buying, their knowledge of the property may not be as thorough as the listing real estate agent. You might find this buying a house checklist helpful before signing a contract.
You must check everything that is written in the sale and purchase contract including dates, chattels, sale price, deposit amounts, conditions, clauses or settlement and expiry dates. This is a legally binding document and we advise you to get this checked by your lawyer or conveyancer.
Property Information Pack Approval - This includes all documents and marketing material that if selling, you intend to pass on to buyers. You or your lawyer need to approve the content of this due to the decisions that will be made based on what it entails such as property title documents or code of compliance documentation. The effort real estate agents go to, to make this informative or otherwise, can be very telling.
Client Consent for a licensee to acquire interest in property - Should your real estate agent, or anyone related to them, or a colleague for example, wish to purchase your property, they must get your consent in writing. The form is available to download from the Real Estate Authority where you can find the legal definition of 'related person' for this purpose.