Agency Agreements – what to be aware of

To sell a home in New South Wales (NSW), an agent must hold a real estate agent’s licence issued by NSW Fair Trading. Before marketing the property, the agent must sign a contract with the vendor known as an ‘Agency Agreement’. This legal binding contract outlines the relationship between the agent and the property vendor.

Enforceability

Under the Property and Stock Agents Act 2002, for an agreement to be enforceable, it must be in writing, signed by both the vendor and the agent, include specific warnings and notices as required by the regulations, and be provided to the vendor by the agent within 48 hours of signing. If any of these requirements are not met, the vendor may still be liable to pay the agent’s commission upon the sale of the property if a Court or Tribunal determines that the non-compliance is minor, the vendor has not suffered any loss and it would be unjust not to enforce the agreement.

Exclusivity Period

In NSW there are five standard types of agency agreements, including: exclusive, auction, sole, general listing / open, and multiple. Each type serves a different purpose and determines how commission is paid. The most common type is the exclusive agency agreement, which means you engage the named agent exclusively for a certain period. Under an exclusive agency agreement, the agent is entitled to their commission even if the purchaser is introduced to the property by the vendor or someone else. Conversely, a non-exclusive agency agreement allows you to appoint multiple agents, with only the agent who sells the property being entitled to the commission.

Agent’s Commission

There is no ‘standard’ agents commission fee for agents; however, vendors can negotiate the commission paid to the agent. In NSW, no legislation dictates what real estate agents can charge for selling your property. The commission rate depends on various factors, including your location, the property’s value, the current market conditions, and the specific real estate agent you choose.

The best way to evaluate an agent’s commission fee is to assess the value of their services. We recommend creating a checklist of what constitutes value in a real estate agent, as they play a crucial role in negotiating your financial future.

Ending an Agreement

Under the law, there is a one business day cooling off period during which an agreement can be cancelled. This period allows the vendor time to consider the terms agreed upon. The cooling off period ends at 5 pm on the business day following the signing of the agreement. However, you can waive your rights to a cooling off period if the agent provides you with a draft agreement and a fact sheet from NSW Fair Trading at least one business day before the agreement is signed.

If you decided to terminate the agency agreement during the cooling off period, you must give the agent written notice stating your intention to cancel (or ‘rescind’) the agreement, including your signature. Once rescinded during the cooling off period, the agent cannot charge you any fees or costs related to the agreement, and any money already paid must be refunded.

Ending an agency agreement outside the cooling off period is typically only possible once the fixed term has ended, as specified in the agreement.

Vendors should note that if an agency agreement is not properly terminated and you then sign with another agent, you may be liable to pay commissions to both agents once the property is sold.

For personalised advice on your Agency Agreement, please contact our people.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202