In the old days of real estate it was not uncommon for a property owner to tell a sales consultant that they could bring a buyer through the property on a casual basis but they did not want to formally list their property, pay for advertising or have it marketed.
But since the Real Estate Agents Act 2008, which came into effect in November 2009, it is very clear that a sales consultant must have an agency agreement (often called a listing authority) in place before they can market a property in any way. The old situation outlined above is now in contravention of real estate legislation and any sales person acting in this way would be in breach of the law and would be likely to face disciplinary action from the Real Estate Agents Authority (www.reaa.govt.nz).
It’s also clear, and emphasised in recent disciplinary tribunal cases, that the listing authority must be signed by all owners of the property or a properly authorized signatory (for example, a solicitor or family member with power of attorney).
If vendors think about it, the current rules are to their advantage. No property can be marketed or sold by a real estate agent without a proper listing contract in place. The contract, between the real estate agency and the owner, sets out all terms of the contract, including the sale method, date of the agency starting and ending and the commission and other costs that have been agreed. So the rules are formally in place before marketing begins.
As a strong side point, vendors should note that they will only have one opportunity to launch their property to the market as a new listing. It is to their advantage to agree on all aspects of marketing and the agency before showing any buyer the property. I would argue that a strong marketing budget is a key factor in gaining a top price. Selling informally, or “selling by secret”, might attract a few buyers known to a salesperson but the best buyer could easily overlook the property if it’s not well promoted.
In one recent case, I presented 13 offers to the vendor of an obviously very popular property. The vendor budgeted for the recommended marketing costs and was thrilled to accept an offer price many tens of thousands of dollars over her original expectations. Multi-offers are not unusual in this market and sellers should think carefully before choosing a salesperson. A consultant with a successful record in handling multiple offers and attaining top prices is more likely to achieve a premium sale price.