The Real Estate Agents Authority (www.reaa.govt.nz) came into force on the 17th November, ensuring Real Estate Agents are now accountable. But what exactly has changed in relation to buying and selling property?
In the past, the whole Real Estate Industry has been self regulated.
17th November was when it became regulated by the Government.
The following schedule lists the Old and New rules as best I can, highlighting key differences for both Seller and Buyer and showing the keyword to be Disclosure – a good thing for everyone.
Old. Self Regulated.
New. Goverment Regulated with some RE involvement.
Old. Only Agent licensed with Salespeople covered by Agent license.
New. Agent, Branch Manager and Salespeople all need to be licensed and they MUST carry this with them whilst on duty. All have individual responsibility for their actions and the Agent has collective responsibility.
Old. Complaints heard by REINZ only.
New. Complaints heard by REAA and REINZ. In the first instance complaints should be made to the Agent.
Old. Membership of the REINZ compulsory.
New. Not compulsory.
Old. Professional Indemnity Insurance not compulsory.
New. As before but with fines in the $10,000 plus range, most are expected to take this up. Expect costs to be passed on though.
Old. Minimal qualifications although beefed up in 2008.
New. Existing RE people can Granfather their qualification over but if trained before 2008 they must resit the new exam if they leave one Employer/Agent and not start with a new one immediately. New entry qualifications much tougher.
Old. Apart for the Listing Agreement and Sale & Purchase Agreement very little documentation required for either Seller or Buyer.
New. 3 new documents. REAA Professional Conduct and Clinet Care (must be carried by RE people at all times whilst on duty). NZ Residential Property Agency Agreements Guide (for Sellers) and NZ Residential Property Sale & Purchase Agreements Guide (for Buyers). Seller must sign to say received and Buyer must also prior to entering into any S&P Agreement. Overseas Sellers and Buyers can receive by e-mail and e-mail confirmation.
Old. When Listing no requirement to evidence research when determining a Selling Price.
New. Full disclosure as to how the Selling Price has been calculated although a Seller can choose any Selling Price they wish, with a signed disclaimer.
Old. Listing time around 20 minutes.
New. Expect around 90 minutes to allow for Seller disclosure and recording of a much more comprehensive New Listing Agreement. Sellers are required to disclose all and any known defects in the property and the Agent records these.
Old. Agent not required to disclose amount of Advertising included in the Listing Agreement or disclose any discounts they may enjoy.
New. Full disclosure as to what advertising, where and when. For paid Advertising no mark ups allowed and full disclosure as to any discount received. A $ value for the Commission is also required, not just a %.
Old. Exclusives could be virtually endless.
New. Exclusives now maximum 90 days which can be extended by mutual consent. Most Agents expected to issue a Relisting Agreement although no such document is in the Regulation.
Old. Buyers Agents although rare in NZ still paid for by the Seller. No formal structure in place.
New. Buyers Agents formalised and need to be licensed. Agreements in writing and details of fees and charges clearly laid out. Paid for by the Buyer and the Agent cannot act for Buyer and Seller in same transaction.
Old. For Buyers no documentaion at all apart from a Sale & Purchase Agreement.
New. NZ Residential Property S & P Agreements Guide must be given to the Buyer and signed for before any S & P Agreement drawn up. If already received then sign to say so.
Old. No requirement for Agent to advise Seller or Buyer to seek legal advice before signing S & P Agreement.
New. Now a requirement to advise although both Seller and Buyer may decline.
Old. Commission paid after 10 days from unconditional contract or earlier if early release document signed.
New. Now 10 working days.
Sorry this has taken a while to read, theres a lot in the new regulation and it goes a long way to addressing issues. Complaints procedures are now clearly defined and a Seller MUST disclose known faults with the property. However it is still vital that as a Buyer you check everything yourself and not rely on the Seller or Agent. Many Banks are now insisting on Registered Valuations, Building Inspections and Watertightness Reports….maybe as a Buyer you need to as well.
Jeff Royle. The Mortgage Lender 0508 477324