The agency agreement, clause by clause

Before you read a specific agreement

Most NZ residential listings use an agency agreement drafted by the agency itself, sometimes based on the Real Estate Authority's Agency Agreement Guide or a REINZ template. Two core decisions structure everything else.

Sole agency or general agency. A sole agency grants one agency the exclusive right to market the property for a defined period, typically 90 days. A general agency allows multiple agencies to list the property at the same time; whichever agency introduces the successful buyer earns the commission. Sole agency concentrates agency incentive; general agency concentrates competitive pressure among agencies. Nearly all NZ agents prefer sole agency. Nearly all the vendor-friction stories in this section arise from sole agency.

Method of sale. The agreement will specify auction, tender, deadline sale, by negotiation, or fixed price. Once chosen, most of the marketing budget and timeline flow from this choice. See Method of sale.

Under Rule 11.1 of the Professional Conduct Rules, the agency must give you a copy of the NZ Property Law Section "Agency Agreement Guide for Sellers" (or equivalent REA guide) before you sign. If that document was not provided, the agreement's enforceability may be affected. Ask for it in writing if it was not offered.

The twelve clauses that matter

The clauses below appear, in some form, in almost every NZ residential agency agreement. The wording varies by agency. The underlying mechanics do not.

1. Identification of the agency and licensee

The agreement must identify the agency (the licensed entity) and the specific licensee or licensees responsible for the listing. Under the Real Estate Agents Act 2008, both are bound by the Professional Conduct Rules. The agency entity — not the individual salesperson — holds the contract. This matters when the salesperson leaves the agency mid-listing; the agreement continues with the agency unless it specifically says otherwise.

What to check. Is the listed licensee the person you met? Does the agreement allow the agency to assign the listing to a different salesperson without your consent?

2. Commission structure

Typically a tiered percentage: something like 3.95% on the first $400,000 plus 2.0% on the balance, plus an administration fee, plus GST. See Commission in NZ for the full picture.

What to check. Are the percentages, the admin fee, and the GST treatment all in the written agreement? Is there a conjunctional split set out if another agency brings a buyer? If the agreement says "commission as per our schedule" without attaching the schedule, that is not enforceable against you without the schedule.

3. Marketing budget

A specified dollar amount, typically ranging from $3,000 to $15,000 or more depending on the method of sale and property value. Marketing costs are a vendor expense, not an agency expense, but the agency selects the providers and manages the invoicing.

What to check. Is the budget itemised? Does the agreement permit the agency to exceed the budget without your written approval? Does it require marketing invoices to be provided to you on request? If the agreement permits "reasonable additional spend" without explicit approval, that phrase is a negotiation point.

4. Exclusive period (sole agency only)

A set number of days during which only the listing agency may market the property and earn commission. Ninety days is typical; some agreements are shorter, some longer. After the exclusive period ends, the agreement typically converts to a general agency (or ends) unless renewed.

What to check. Is the period 90 days or longer? Does the agreement renew automatically, or do you need to explicitly renew? Sixty days is often negotiable, particularly in active markets.

5. Cancellation and termination

Agreements vary widely on cancellation. Some require notice of one or two weeks to terminate; some prohibit cancellation during the exclusive period except by mutual agreement; some include break fees. Under the REA Act, a sole agency agreement is terminable by the vendor on written notice after the exclusive period ends (typically with a 28-day notice requirement; check the specific agreement).

What to check. Can you terminate the agreement before the exclusive period ends if the agency's performance is unsatisfactory? If so, on what grounds and with what notice? If there is a break fee, is it a liquidated-damages clause (which must be a genuine pre-estimate of loss to be enforceable) or a penalty (potentially unenforceable)?

6. Introduced-buyer clause

A clause that extends the agency's commission entitlement beyond the end of the exclusive period for any buyer the agency "introduced" during the period. If that buyer later purchases the property — sometimes within three, six, or twelve months after the agreement ends — the agency still collects commission, even if the buyer was introduced by a different agency (or by you) at the time of the sale.

What to check. What counts as an "introduction"? Is it a formal written enquiry? An open-home attendance? An oral expression of interest? The definition matters because loose definitions can create commission obligations for buyers you barely remember meeting. A written list of buyers the agency claims to have introduced, provided to you at the end of the exclusive period, is a reasonable request — and is the basis for any future dispute.

7. Authority to market and to act on vendor's behalf

A clause granting the agency general authority to market the property, arrange photography, contact professionals (your solicitor, for example), and execute documents on your behalf within specified limits. The scope of this clause determines what the agency can do without asking you again.

What to check. Exactly what is the agency authorised to do without further approval? Can they contact your solicitor and incur legal fees on your account? Can they engage inspectors or photographers at your cost? Broad pre-approvals are where friction most often arises later. A useful redline: replace "the agency is authorised to engage professionals on the vendor's behalf" with "the agency may engage professionals on the vendor's behalf only with the vendor's prior written approval in each instance."

8. Vendor warranties and representations

Statements the vendor makes to the agency about the property — that the vendor is the registered owner, that no undisclosed consents are outstanding, that the vendor has authority to sign, and so on.

What to check. These are generally standard and should be accurate. If there are any complications — joint ownership, a trust, an executor situation, a disputed boundary — flag them in writing before signing so the agreement reflects reality.

9. Disclosure of agency's interests and benefits

Under Rules 6.2, 6.4, 9.1 (and REA Act s.134 where the licensee is a party to the transaction), the agency must disclose any conflict of interest and any benefit received from referred service providers (inspectors, lawyers, photographers, stagers). Agency agreements sometimes include a formulaic "we may receive referral benefits" clause. Formulaic disclosure — "we may receive a referral benefit" — does not meet the Rule 6.4 "not withhold information that should in fairness be provided" standard where specific benefits are in fact received.

What to check. Is there a schedule listing specific referral relationships and benefits? If not, request one. The answer in writing becomes the benchmark for the provider-fee conversation later.

10. Privacy and information handling

How the agency handles your information, marketing photographs, and documents under the Privacy Act 2020.

What to check. Does the agreement specify how photographs of the interior will be used (marketing only, not training data, not resale)? How long is your information retained after the sale? Is there a data-handling breach notification commitment?

11. Dispute resolution

Some agreements direct disputes to industry mediation, arbitration, or specific courts. These clauses do not override your right to complain to the REA or to pursue remedies under the CGA, FTA, or Privacy Act.

What to check. Does the dispute resolution clause purport to exclude your statutory rights? If so, that exclusion is ineffective to the extent it conflicts with statute. A clause that says "this is the exclusive remedy" should be narrowed or removed.

12. Auction-specific provisions

If the method of sale is auction, the agreement usually includes: auctioneer fee, vendor-bid authority, reserve-price process, and arrangements for the property being passed in.

What to check. Is the auctioneer named, and what is their fee? Who decides the reserve, and when? What happens if the property is passed in — is the agency automatically entitled to continue marketing, and on what terms?

Red flags that warrant negotiation

Specific wording patterns that should prompt a rewrite before signing:

• "The agency may engage professionals on the vendor's behalf." Without "with prior written approval," this clause pre-authorises contact with your solicitor, inspectors, and others at your cost.
• "The agency is authorised to make decisions on the vendor's behalf in relation to marketing." Overly broad. Specify which decisions require vendor approval.
• "Marketing costs as reasonably determined by the agency." Converts your capped budget into an open-ended invoice. Replace with a specific cap.
• "The exclusive period automatically renews unless cancelled." Converts a fixed-term commitment into a rolling one without re-authorisation.
• Introduced-buyer periods longer than 90 days. Six or twelve months is excessive and creates commission liabilities long after you have moved on.
• Referral benefits acknowledged in generic "may receive" language. Request a specific schedule of actual benefits.

The specific question of "we may contact your solicitor"

Almost every agency agreement includes a clause permitting the agency to communicate with the vendor's solicitor on the vendor's behalf. The clause exists for a legitimate reason — it allows the agency to forward documents, coordinate settlement, and answer queries without having to relay every message through the vendor.

In practice, the clause can also be used to contact the solicitor on matters the vendor has not approved, generating legal fees at the vendor's hourly rate. Under Rule 9.1, the agency must act in the vendor's best interests; incurring unnecessary legal costs is not in the vendor's best interests. Separately, where the agency has routinely sought approval for smaller matters and acts unilaterally on a larger matter, NZ contract law's course of dealing and estoppel by convention doctrines may limit the agreement's pre-authorisation.

The practical redline: narrow the clause to "the agency may communicate with the vendor's solicitor with the vendor's prior written approval in each instance, except where the communication is limited to forwarding documents for the solicitor's information." This preserves the legitimate coordination use and closes the cost-accumulation use.

What to do after you sign

The signed agreement is one document you will return to repeatedly. Keep a copy alongside the marketing budget and any email correspondence from the agency. When a question arises later ("can they do this?"), the answer is in the agreement.

If the agency acts on your behalf in a way the agreement does not clearly authorise — and does so without asking you — respond in writing, reference the specific clause, and request written confirmation of the agency's position. The email trail is the evidence either for a resolution or for a later complaint.

Where this guide sits in the section

Next in this section: Selective Approval Theatre — the pattern where the agency seeks approval on small matters while acting unilaterally on substantial ones, and what NZ contract law and REA Act Rule 9.1 give you as counter-argument.

Rules cited on this page: Real Estate Agents Act 2008, Professional Conduct and Client Care Rules 2012, Privacy Act 2020, ADLS Agreement for Sale and Purchase of Real Estate.