Usually when setting out on the home selling journey, a question at the forefront of our minds is 'how much will the real estate agent cost?'

But perhaps an even more important consideration for the successful sale of your property is whether the firm is made up of competent estate agents.

Many people believe that all real estate agents do is stick a sign at the gate, over-charge fees and sell a house at any price. 

However, real estate agency work is an often complex process that requires careful administration of multiple legal documents. It's a process that can change lives for better or worse depending on how well it's done.

If you're thinking about finding an agent and want to understand what real estate agent expenses are and why, it’s well summarised here so read on


Omar Yehia on Unsplash

We decided to learn more about how it works behind the scenes in a real estate office to find out where all the commission goes.
Our findings reveal that a real estate agent fulfilling their accountability to buyers, sellers and industry authorities is no small task, with life-changing consequences if they get it wrong.
Agents have been held to account since the introduction of the Real Estate Agents Act 2008 and the reality of what they actually do is quite different from popular perception.
Furthermore, sellers who have had good experiences show that it's not all black and white.

To shine more light on the matter, here’s our 9-point list of findings:


1. Real estate agents and agencies must abide by legal responsibilities.

All real estate agents come under the Real Estate Agents Act 2008 and therefore the Government watchdog, the Real Estate Authority (REA).

Real estate work is a legal process with multiple legal documents required during the sales process. It must be conducted in a methodical order as required by the Government watchdog.

To comply with the rules and guidelines of the REA, real estate agents can be held to account, fined, censured or lose their licence to operate if it is proven by the REA, a Complaints Assessment Committee or the Tribunal that they:

  • Deliberately or unknowingly misled consumers.
  • Failed to do adequate research about a property.
  • Appraised a property at a value considered to be unachievable, for the purposes of acquiring (buying) your listing.
  • Failed to disclose any conflict of interest in a property as either a buyer or a seller.
  • Omitted obtaining signatures of all property owners.
  • Attempted to market or sell the property without providing a written property appraisal.
  • Attempted to sell the property without a signed agency agreement with the vendor.
  • Misquoted financial information about a property, for example rental capacity, body corporate fees or levies.Candice Picard on Unsplash
  • Failed to recommend consumers use a lawyer when buying or selling property.
  • Failed to recommend that a seller get an independent valuation should the real estate agent or someone they are related to whether family or business wish to buy a property listed by them.
  • Made any changes to an agreed marketing plan without the written approval of the vendor.
  • Made false claims about the condition of a property, the integrity of building material or quality of build.
  • Disclosed confidential information about a buyer or seller to their client.
  • Failed to comply with the REA rules pertaining to the different methods of sale and negotiation.
  • Prepared contracts that are defective.
  • Misled or failed to establish correct property boundaries.
  • Failed to put offers in writing on a sale and purchase agreement.
  • Failed to disclose any issues with neighbours that may impact a decision to purchase a property.
  • Made unsubstantiated representations or failed to check what are considered to be facts about a property, for example if told it's architecturally designed, they must obtain proof of this, most especially if these words are used in the marketing material.
  • Made a change to a sale and purchase agreement without all required signatures.
  • On-sold a property (known as ‘flipping’ ) after having just sold it, without recommending to the first vendors of the property that they should get an independent valuation.
  • Recommended property valuations be conducted by a valuation company they have an alliance with.

If you need help finding a competent agent who has the integrity to help and advise you, get in touch now.


2. Company principals, branch managers or any real estate agent licensee in a position of supervision or management are required to:

  • Provide adequate supervision and training to produce competent agents.
  • Ensure all those licensed complete annual training as required by the REA.
  • Ensure all real estate agents and licensees understand legal documentation (agents are required by the REA to encourage all buyers and sellers to seek legal advice because agents are not lawyers but are dealing with legal matters on behalf of consumers).
  • Provide adequate supervision for real estate agents, especially those who work remotely which has become more common since Covid.
  • Have policies and processes in place so all agents comply with the REA Act 2008 and the Code of Conduct which was jointly developed with the REINZ to maximise agent competence throughout the industry.
  • Ensure that all real estate agents have sound knowledge of legislation relevant to real estate agency work.
  • Oversee that all their real estate agents keep their licences current with the REA.

Request a list of vetted real estate agents here - it's a genuine free service.



4. It pays to know more about a real estate agent’s conduct, standards, history and competence levels.

Established in 2009, Agent Finder NZ specialises in vetting real estate agents using over 20 indicators across four categories. Most of our clients sell in half the average time or even less.

Find out how long it takes to sell a house.

Agent Finder NZ determines which real estate agents provide the greatest sale price potential and present the least risk in terms of conduct and competence. Agent Finder NZ is a bespoke, New Zealand-wide service that uses a rigorous selection criteria – and it’s free.

When there is so much at stake financially, it pays to know more about your real estate agent.


5. Are real estate agents that sell the most properties the best?

Consumers seem to find comfort in using agents that sell a high volume of properties. But what numbers don’t tell you about are things like customer experience and agent diligence, competence, conduct or negotiation skills. In fact it doesn’t actually tell you whether they achieve the highest sale prices for their vendors. All it tells you is the number they sold.

Real estate agent vetting is the best safety net for consumers when looking for real estate agents to sell their properties.


6. What percentage is the commission charge?

Commission fees are usually around 2.95 per cent to 3.95 per cent on average, but usually only for the first $400,000 to $500,000. For anything above that, it drops to around two per cent. For properties of very high value, exceeding $1M, the commission can be substantial so you should try negotiating before you sign a listing authority.

7. How commission gets divided up.

  • Real estate agents receive around 50 per cent of any commission charged.
  • Some will receive a greater percentage for higher levels of seniority or performance and each company has its own structure.
  • Commission is negotiable although not all real estate agents will agree to negotiate. Find out more about commission rates and opportunities to negotiate commission.


8. Costs that have to come out of the company commission include:

  • Franchise fees
  • Commercial office rental
  • Operational overheads including support staff
  • Systematic staff training for company policies, compliance and regulations
  • Marketing and advertising of their own company
  • Asset purchases to run their companies

9. Costs that have to come out of a real estate agent’s commission include time spent:

  • With lawyers, mortgage brokers, insurance companies and body corporates to help facilitate a sale
  • Researching and preparing a comparative market appraisal, marketing plan and method of sale
  • Coordinating the legal administration related to various methods of sale
  • Visiting you on multiple occasions for amendments, signatures and presentation of offers
  • Doing open homes or private viewings which includes follow-up phone calls to all of them and you
  • Writing reports for their vendors about interest gained
  • Acquisition and preparation of legal paperwork including titles, listing authorities, sale and purchase agreements, clauses, government valuations, independent valuations, engineering reports or methamphetamine testing
  • Assisting and advising vendors on property presentation
  • Preparing marketing and advertising material
  • Downloading information into multiple websites that advertise your property

Other real estate agent expenses include:

  • Secretarial services for some
  • Operational overheads
  • Licensing fees for the Real Estate Authority (mandatory) and the Real Estate Institute of NZ (optional)


1.  For sure, it’s really expensive, but there are ways to negotiate and offset expenses to reduce it – think it through.

2.  Use a thoroughly vetted real estate agent rather than waste your time on ones you know nothing about. At stake are your assets, worth hundreds of thousands of dollars.

3.  Be prepared and informed before you meet any real estate agents – use Agent Finder’s interview questionnaire to help compare apples with apples.

4.  Consider the real estate agent’s expenses and don’t assume your agent gets all the commission, they don’t.

5.  Plan to negotiate logically, rather than winging it.

6.  Get everything in writing; verbal appraisals are not okay.

7.  Use a property lawyer – they see things that the ordinary consumer doesn’t and might save your bacon.

Remember the agent doesn’t receive any payment at all until a property goes unconditional and if it doesn’t sell at all, you pay no commission.


We are independent of real estate agents and are therefore in a position to give unbiased free advice about the best real estate agent to handle the sale of your house.

Agent Finder NZ can point you in the direction of quality real estate agents who will ensure your sale is handled in a fully professional way. It's 100 per cent free, so you have nothing to lose and everything to gain.

Save this article to favourites so you can refer to it later, get in touch or give us a call on 0800 789 532

Agent Finder NZ Awards:

  • Best Independent Real Estate Advisors 2022 | BUILD 2022 Real Estate & Property Awards
  • Best Property Advice Hub New Zealand 2021 | APAC
  • Most Reputable Property Advice Hub New Zealand for Wise Up NZ 2020 | APAC
  • Best Real Estate Agent Vetting Service 2018 | APAC

Article updated February 22, 2023 by Trish Willis | Member of Property Institute of NZ (IPAC)

Disclaimer: The content of this researched article is general in nature and not intended as a substitute for specific professional or legal advice on any matter and should not be relied on for that purpose
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