HOW TO CANCEL A SOLE AGENCY AGREEMENT

If you are thinking of changing real estate agents, we can guide you through the process to ensure you avoid paying double commission. 

There is a 'grace period' after signing but once that deadline has passed, the process requires a more tailored approach, depending on the contract you signed. Each real estate agency has their own contract.

Common reasons for wanting to change real estate agents include disagreements about the market value, property descriptions or marketing, agent unreliability or conduct at open homes, undue pressure to accept a low price or lack of communication. The reasons are many.


TIMEFRAMES FOR CANCELLING AN AGENCY AGREEMENT

There is a cooling down period after signing an agency agreement with a real estate company.

  • If you change your mind immediately after signing, you can cancel the agreement by 5.00 p.m. on the first working day after the real estate agent has given you a signed copy.
  • The agent is required to provide you with a copy of the agency agreement with both signatures within 48 hours of you signing it. You must cancel in writing, for example, by letter or email.
  • If you have signed a sole agency agreement after being approached unsolicited by a real estate agent, you will have five days to cancel and it does not need to be in writing.

However, if a real estate agent carries out any work before the agency agreement being terminated that results in the sale of the property, the agreement will be legally binding.


AVOID BEING LIABLE FOR PAYING DOUBLE COMMISSION

Beware before signing an agency agreement – the peril of paying double commission

  • If you terminate an agency agreement due to being unhappy with your real estate agent, you need to be aware of when double commission could be due – to your former agent and your current one.
  • If the first agency has done work that contributes to the sale of your property – for instance finding a buyer who later goes onto purchase it via the second agency, you may still have to pay the first real estate agency commission.
  • In this instance the commission would be shared between the first and second agents.
  • You should check with your new real agent about the risk of paying two commissions.

The original agreement must be cancelled in writing with a date that is to come into effect.


INDUSTRY AUTHORITY CLAUSES HELP

Standard Clauses were developed jointly by the Real Estate Authority and the Real Estate Institute of NZ to create greater certainty around the scenario of double real estate commission being charged to vendors.

Before signing an agency agreement, real estate agents must advise the vendor on the circumstances in which full commission would need to be paid to more than one agent.

When an agency agreement is terminated, your real estate agent has to give you a written list of the names of prospective buyers the agent would claim a commission on if they ended up buying the property.

Not all real estate agents are using the standard clauses designed to create greater clarity around double commission scenarios, but all must advise vendors of the possibility of double commission in the event of an agency agreement termination.

Cancelling an agency agreement part way through your contract

What happens once a sole agency agreement is cancelled depends on what the agreement says, however agents must still have advised you about the possibility of double commission.

  • A second agent will have no control over any previous agency agreement.
  • Vendors should keep a copy of the previous real estate agency agreement.

Sole and General agency agreements

You could have either a sole agency agreement (where you list with only one agency)  or a general agency agreement (where you can list with several). If it's a general agreement, it will specify the notice period for cancelling so that the agency can conclude any introductions. However, in our experience, you are better to list with one vetted real estate agent rather than multiple.

  • Cancelling a sole agency agreement means it becomes a general agency agreement. You’ll need to cancel this too if you don’t want to continue with the agency.
  • Seven (7) days’ notice is required to cancel a general agency agreement.
  • Question if a notice period for termination is longer than 14 days.
  • If you sign a sole agency agreement for a term of more than 90 days, either you or the agency can end the agreement after 90 days. This must be done in writing.
  • If you sell your home privately within six months of the agency agreement coming to an end (either sole or general agency), to a person introduced by the agency or where the agency was instrumental in the sale, the vendor is liable to pay the agent commission. After six months you are not liable to pay commission. In rural transactions in this situation you are liable for commission up to a year.
  • It may not be possible to cancel a sole agency agreement unless the agency agrees.
  • However, you can take your property off the market until the real estate agency agreement expires.

HELP AVAILABLE TO CHANGE AGENCIES

Buyers’ and sellers’ personal situations combined with agents needing to comply with the Real Estate Agents Act 2008 can make real estate work complex. 

We’ve been helping New Zealand home sellers for over a decade. Many have changed real estate agents with our support and have often sold quickly after a new agent has taken over.

If you are worried that you are not with the right real estate agent, we can give you free guidance on how to remedy the situation.

 

If you want to discuss your property in person, call us on 0800 789 – we’re here to help, and it’s free.


Find out more about vetted real estate agents

Article updated September 17, 2021 | About 

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