Sales Agency Agreements

If you decide to engage an agent, there must be a signed written agreement (a sales agency agreement) between you and the agent. The agent must give you a guide explaining your rights and obligations under the agreement (Form R1).

The sales agency agreement must specify:

  • How the property is to be offered for sale.
  • The duration of the agreement.
  • The agent’s fee.
  • Services to be provided and the cost of these services.
  • The nature, source and amount of any commissions, rebates or discounts expected to be received by the agent in relation to services.
  • The agent’s genuine estimate of the selling price of the property. The price can only be expressed as a figure (e.g. $330,000), not a price range.
  • A price that you would accept for the sale of the property.

It is important to retain a copy of the agreement for your records.

The price that you and the agent specify in the sales agency agreement will affect how the property is marketed. Agents are prohibited from representing to potential buyers a likely selling price that is less than the agent’s estimated selling price or your bottom line (whichever is the higher).

The maximum length the agreement can run is 90 days, but an agreement may be extended (see below for more information).

Fees and terms

The agent’s fee may be in the form of a commission, a set fee or a combination of both. The fees and terms can be negotiated. Some agents may charge a low commission rate but charge more for marketing and advertising your property.

You may be charged the up-front cost of advertising with a particular publication, but agents commonly receive a rebate as they place large numbers of advertisements. You may be asked to pay significantly more than the actual cost of the advertisement when the rebate is taken into account. Ask the agent the amount of the advertising rebate that they expect to receive. You are within your rights to negotiate to receive some benefit from those rebates.

Types of agency agreements

There are two main types of agency agreements: sole agency agreements; and general (or open listing) agreements.

Sole agency agreements are used most often. The agent has the exclusive right to sell the property and is entitled to receive the agreed commission, even if you sell the house yourself.

Under a general (or open listing) agreement the agent is only entitled to commission if he/she sells the property. Depending on the terms of the agreement, you can open list your property with several agents and can generally cancel the agreement at any time by giving written notice to the agent. Most agents do not offer a general agency agreement, because they are at risk of meeting the costs of marketing the property without a guarantee of commission if the property is sold.

Extending a sales agency agreement

With less than 14 days to expire, an agent may offer to extend your agreement for up to a further 90 days. It is your choice to accept or decline. However, if you do not receive a Notice of Expiry, your contract is automatically extended for 180 days. During any extension, you may cancel your sales agency agreement by giving 7 days notice in writing, without providing a reason.

Withdrawal from sale

If you have listed your property with an agent and decide to withdraw your property from sale, there may be consequences if you list the property with another agent before the original agreement has been terminated or has expired with correct notification. For example, you may have to pay commission to the first agent even though a second agent sold the property. Seek legal advice if you want to terminate an agreement.