Choosing an agent: the unvarnished guide

The three things the agent sells you

When a real estate agent presents at your kitchen table, they are selling three things at once: a market appraisal (the price they expect), a marketing plan (how they will reach buyers), and themselves (why you should engage them rather than someone else). Each of those three is calibrated to win the listing. The appraisal may be optimistic. The marketing plan may be generic. The self-presentation is rehearsed. None of this is dishonest; all of it is the commercial reality of an industry where getting the listing is the first and often hardest step for the salesperson.

Once the agency agreement is signed, the incentive landscape changes. The agent now needs the property to sell. The price at which it sells matters less to their commission than whether it sells at all, because a sale at $950,000 instead of $1,000,000 reduces their commission only by the percentage above the threshold — typically a few hundred dollars to a few thousand — while a sale that does not happen reduces it by the full commission. This is the principal-agent gap. It is structural, not personal.

What the research shows

The single most quoted peer-reviewed study on this topic is Levitt & Syverson (2008) in the Review of Economics and Statistics. Using roughly 98,000 Chicago transactions, the authors compared the prices agents achieved when selling their own homes to the prices they achieved for clients. Agent-owned homes sold for 3.7% more and stayed on the market 9.5 days longer than comparable client homes. The gap widened in neighbourhoods where information asymmetry was greater.

Rutherford, Springer & Yavas (2005) replicated the finding on a different dataset: agent-owned homes sold at a 4.5% premium. Hendel, Nevo & Ortalo-Magné (2009) compared MLS-listed homes with homes sold through a FSBO platform in Madison, Wisconsin, and found that FSBO sellers achieved the same net price as MLS sellers; the 6% commission bought speed, not price. Bernheim & Meer (2013) examined Stanford faculty housing where MLS access was decoupled from brokerage; using a broker reduced the sale price by 5.9–7.7%.

These are US studies. No equivalent NZ empirical study has been published. The New Zealand market structure — tender and auction more common than private treaty, the 1990s commission tiers still in place while listing prices have risen roughly tenfold — may produce larger or smaller effects. But the direction of the evidence is consistent across jurisdictions and decades: agents are the better-informed party in residential transactions, and they tend to use that information advantage when it is their own equity on the line. There is no reason to think the NZ market is magically free of the pattern the international data consistently shows.

What New Zealand law requires of your agent

An agent in New Zealand is a licensee under the Real Estate Agents Act 2008. The statutory term covers agents, branch managers, and salespersons — collectively bound by the same rules. Licensees operate under the Professional Conduct and Client Care Rules 2012 made under section 14 of the Act, commonly referred to as the Code of Conduct. The relevant obligations include:

• Rule 9.1 — "A licensee must act in the best interests of a client and act in accordance with the client's instructions unless to do so would be contrary to law." The client is you — the vendor. The licensee's best-interests obligation runs to you, even when it produces friction with the transaction they want to close.
• Rule 9.2 — "A licensee must not engage in conduct that is misleading or deceptive or is likely to mislead or deceive." This applies to statements about the property, the process, and the parties.
• REA Act s.134 (licensee-as-party contracts) combined with PCCC Rules 6.1 (client fiduciary), 6.2 (good faith), 6.4 (not withholding information), and 9.1 (client best interests) — taken together, these require disclosure of any rebate, commission, or benefit the licensee receives from recommending a particular service provider. There is no single dedicated "referral benefit" rule in the PCCC. If your agent refers you to an inspector, photographer, stager, or lawyer and receives any benefit from that referral, the benefit must be disclosed.
• Rule 10.7 — imposes a duty to disclose known defects to a prospective purchaser. This sits alongside New Zealand's general caveat emptor framework; it does not create a statutory vendor disclosure statement for non-unit-title property.

These obligations are frequently invoked in conversations about why the agent has done something. They are also frequently invoked incorrectly — compliance with agency risk-management policy is not the same as compliance with the Act. A useful habit from day one is to ask: which rule, specifically? If the answer is not a rule, the requirement is the agency's or the individual agent's. Both can be negotiated.

Sole agency vs general agency

New Zealand agency agreements come in two forms. A sole agency grants a single agency an exclusive right to market the property for a specified period, commonly 90 days. A general agency allows multiple agencies to market the property simultaneously; whichever agency introduces the successful buyer earns the commission.

Sole agency is the default pitch because it concentrates the agency's incentive — they are the only ones who will benefit from the listing, so they will invest more in it. In practice, the commitment often manifests as marketing spend the vendor pays for, rather than as a greater share of the agent's own time. Sole agency also includes provisions you should read before signing: a minimum exclusive period, break-fee arrangements if you terminate early, and, critically, introduced-buyer clauses that extend the agent's commission entitlement to any buyer they introduced during the exclusive period if that buyer later purchases — sometimes for months after the agreement has ended.

General agency produces more competitive pressure among agencies and less vendor lock-in, but in a low-volume period can produce less attention per listing because no single agency has security of reward. The decision between them is not abstract: it depends on how competitive your specific market is, how long you are prepared to wait, and how confident you are in a particular agent's work.

A conjunctional sale is permitted under a sole agency: an agent from a different agency can introduce a buyer, with commission split between the agencies per the agreement. Some listing agents quietly discourage conjunctional interest because it halves their commission. Under Rule 9.1, doing so because it reduces the agent's share — rather than because it does not serve the vendor — is a breach. The Real Estate Authority publishes dedicated guidance on conjunctional sales.

How New Zealand commission is structured

Typical New Zealand residential commission structures use tiered percentages. A common schedule is 3.95% on the first $400,000 plus 2.0–2.5% on the balance, plus an administration fee of a few hundred dollars, plus GST. On a $1,000,000 sale this produces a commission in the order of $28,000 to $32,000 plus GST. The exact numbers vary by agency.

These tiers were set when the average NZ house price was a fraction of what it is today. The percentage has remained essentially stable while the base has grown roughly tenfold. The service the agent performs for that fee has not changed proportionally. This is an observation, not an accusation. It is also a starting point for negotiation. Commission is not a fixed statutory schedule. Vendors who ask for a reduction — a lower top tier, a cap, a performance-based variation — sometimes receive one, particularly in slower market conditions or on higher-value properties. Vendors who do not ask never find out.

For a detailed breakdown of the NZ commission structure and a calculator you can run yourself, see Commission in NZ: how much, and what it buys and the Commission Calculator.

Red flags at the kitchen-table pitch

Most agents conduct a pre-listing consultation at the vendor's home. This is the most important meeting in the entire transaction for the agent, and in most cases for the vendor too. Some patterns are worth watching for:

• An appraisal noticeably above comparable recent sales. Some agents knowingly over-appraise to win the listing, then work the vendor down to a reachable price after the agreement is signed. Check their own records: ask for the most recent ten sales in your suburb or on your street, with dates and sale prices. Compare those numbers with the appraisal they are giving you.
• Urgency framing around the agreement itself. "If we want to get into the market this weekend, I need the signed agreement tonight." An agent who genuinely believes the market works for your property will not need to manufacture haste.
• Vague answers on marketing spend. A concrete breakdown — TradeMe Property listing tier, photography, staging, any agency magazine, any paid social — should be available. If the breakdown is "it depends on what we feel we need," they are keeping the option to mark up items in their invoice without detailed vendor sign-off.
• Recommendations for inspectors, lawyers, or photographers without disclosure of any referral benefit. Under the combination of Rules 6.1, 6.2, 6.4 and 9.1 (there is no single dedicated referral-benefit rule in the PCCC), any benefit must be disclosed. Ask directly: "Do you or the agency receive any benefit if I use your recommended inspector?" The answer goes on the record.
• Reluctance to negotiate any clause. A standard-form agreement can be amended. A "we don't negotiate this" response to every specific clause is a statement that the agent prefers their position to yours — which is the opposite of the best-interests obligation.

Ten questions to ask — and write down the answers

These questions reveal where the agent sits on the structural spectrum between vendor advocate and transaction-completer. Ask them, and record the answers. Where the answer conflicts with later conduct, the record is the evidence.

1. What are the last ten sales in this street or immediate area, with sale price and days on market? (Establishes their pricing basis.)
2. What is your recommended method of sale and why, specifically, for this property? (Tests whether the recommendation is generic or property-specific.)
3. If we go to sole agency, what is the minimum period, and what are the exact cancellation and introduced-buyer terms? (Reveals lock-in provisions that are frequently skimmed.)
4. What is the detailed marketing budget? Please list each item, its cost, and the invoice source. (Starts the paper trail on marketing spend.)
5. Do you or the agency receive any referral benefit from the inspectors, photographers, stagers, or lawyers you recommend? (Rules 6.1, 6.2, 6.4 and 9.1 combined with REA Act s.134 make this disclosable.)
6. What is the commission schedule, and are any elements negotiable? (Tests their openness to fee discussion.)
7. How do you handle offers below the asking price — are all offers presented to me, or do you filter? (Establishes the offer-screening practice.)
8. If a conjunctional opportunity arises, how is the split handled, and what is your policy on supporting it? (Tests Rule 9.1 alignment.)
9. What will you do if we disagree on disclosure content for the disclosure document? (Prepares the ground for Rule 9.1 and 10.7 conversations.)
10. If I ask for weekly written marketing feedback with the underlying data, can you provide it? (Tests whether feedback will be substantive or narrative.)

Record the answers, date the record, and keep it. If the agency agreement is signed, save the email that accompanied the appraisal and any notes from the meeting. These become the baseline against which later conduct is measured.

Before you sign: a short checklist

• You have read the entire agreement, not only the highlighted sections.
• You understand the exclusivity period, the cancellation terms, and the introduced-buyer clause.
• The commission schedule is in the agreement, not only spoken about.
• The marketing budget is itemised and the agency has agreed in writing not to exceed it without your written approval.
• Any referral benefits from recommended providers are disclosed in writing.
• You have asked the ten questions above and kept the answers.
• You have the Real Estate Authority's own Agency agreement guide as a reference.
• You know how to end the agreement if you need to.

If any of these items is missing, the next step is not to sign. Agents who work fairly will not be troubled by a vendor who asks for these things; agents whose approach depends on them not being asked will self-select out.

Where this guide sits in the section

Next in this section: Method of sale: auction, tender, deadline, or negotiation, and Commission in NZ: how much, and what it buys.

If you are further along and the agreement is already signed, the most important pages to read next are The agency agreement, clause by clause and Selective Approval Theatre.