Buyer's agent information
Before working as a buyer’s agent in New Zealand, you need to be aware of your obligations under the Code of Conduct and Real Estate Agents Act.
What is a buyer’s agent?
Buyers’ agents are agents who work on behalf of a buyer and are paid by the buyer.
A buyer’s agent typically:
- finds properties for a buyer, based on the buyer’s requirements. Regarding a commercial buyer’s agent, they may also source property for a person seeking to lease rather than buy
- helps arrange due diligence such as obtaining a LIM
- negotiates with the vendor on behalf of a buyer
- bids at auction on behalf of a buyer.
Do I need to be licensed to be a buyer’s agent?
Any person who is carrying out real estate agency work, as defined by the Real Estate Agents Act 2008 must be licensed, regardless of whether they act for a buyer or seller.
Any work done, or services provided to bring about a transaction (which would include taking prospective purchasers to view properties or arranging for them to view properties) is real estate agency work and requires a real estate licence.
Buyers’ agents are bound by the requirements of the Real Estate Agents Act 2008 and the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (Code of Conduct). This means they must carry out work for a client under an agency agreement.
You must also comply with Rule 11 of the Code of Conduct which specifically relates to client and customer care obligations for buyer’s agents.
Rule 11 outlines:
- A number of matters that you must explain and set out in writing to a prospective client before the client signs an agency agreement.
- You must only carry out real estate agency work on terms agreed with the client.
- You must submit all written offers made by a client.
- If you are employed by an agent, you must provide that agent with a copy of every written offer you submit.
- You must retain for 12 months copies of all written offers submitted by yourself or by other licensees employed by you, regardless of whether the offer resulted in a transaction.
You are also required to meet other obligations in the Code of Conduct, such as not providing false or misleading information.
Do the buyers need to sign an agency agreement?
Section 126 of the Act states you are not entitled to any commission or expenses from a client without an agency agreement. You must therefore not act on behalf of a buyer as a buyer’s agent unless you are authorised to do so by a written agency agreement.
An agent and agency can enter into a written agency agreement with a seller or with a buyer, but you and your agency must not enter into a written agency agreement with both the buyer and the seller in the same transaction.
You must always act in the best interests of your client regardless of whether they’re a buyer or a seller. The Code of Conduct outlines specific rules for buyers’ agents:
Rule 11.2 states:
Before a prospective client signs a buyer’s agency agreement, a licensee must explain the following to the prospective client and set these out in writing:
(a) the conditions under which commission must be paid and how the commission is calculated, including an estimated cost (actual $ amount) of commission payable by the client, based on the average of the estimated price range of the land or business that the client is seeking to purchase
(b) when the agency agreement ends
(c) any additional services that the licensee will provide, or arrange for the provisions of, on the client’s behalf and the expenses relating to those services which are payable by the client
(d) that the client is not obliged to agree to the additional expenses referred to in rule 11.2(c)
(e) that further information on agency agreements and contractual documents is available from REA and how to access this information.
As a buyer’s agent, you do not need to give an appraisal of the property to your client and you do not have to provide one to the vendor. All other aspects of the code of conduct will apply to your listing.
Do the vendors have to sign an agency agreement too?
If you’re acting as a buyer’s agent you will have an agency agreement in place with the buyer and must act in their best interests. If you are acting for the seller then you must have an agency agreement in place. Remember that you cannot act for both buyer and seller.
You and your agency cannot act as a listing agent for a vendor and also act as a buyer’s agent for a buyer in the same transaction. This would breach the requirements of rule 9.14 of the code of conduct, which prevents licensees and agencies acting in a capacity where they may receive more than one commission from the same transaction.
You should disclose to the vendor that you are a licensed real estate agent, and make it clear you are acting on behalf of the buyer as a buyer’s agent.
How do I get paid?
The terms of your commission should be set out in your agency agreement with the buyer.
There is no standard rate or scale of charges for buyer’s agents. It’s important that you talk to your client about your fees and any expenses before they sign an agency agreement with you. How these charges will be calculated should be clearly outlined in the agency agreement.
The code of conduct outlines specific rules for buyers’ agents when it comes to commission:
Rule 11.2 (a) the conditions under which commission must be paid and how the commission is calculated, including an estimated cost (actual $ amount) of commission payable by the estimated price range of the land or business that the client is seeking to purchase.
If you charge a set fee, you’ll need to disclose whether any separate charges will be added.
Can I get paid from the vendor's agent?
As a buyer’s agent with an agency agreement with a buyer, you are not able to receive any commission from the vendor.
Receiving payment from the buyer and seller from the same transaction is considered a breach of your obligations under rule 9.14 of the Code of Conduct.
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