A new law that comes into effect next month in New Zealand will prevent real estate agents from siphoning off discounts related to selling a client’s property.
Agencies throughout the country will be obliged to comply with the Real Estate Agents Act 2008 from November 17 which means revealing to vendors the various discounts, rebates and commissions they receive from suppliers such as printers, sign-makers and advertisers.
Agents usually take out bulk business with such firms, but until now the deals have been secret and vendors are in the dark about whether discounts given to the agent are passed on to them.
But although the law demands disclosure, it does not demand that the discounts should be passed on.
Many in the industry believe that they should be unless the agent has specific authority to keep them.
Chair of the new Real Estate Agents Authority which is responsible for regulation, Kirsty McDonald, said that disclosure will make the industry more transparent.
‘Examples could include the agent getting a discount on the cost of advertising from a newspaper, or the agent receiving commission from a home staging service for referring clients.
In all cases, the agent will be required to attach a simple form to the agency agreement detailing any rebate, discount or commission received,’ she explained.
But the law is not crystal clear according to Bayleys Real Estate, one of the largest firms in the country.
Managing director Mike Bayley described it as ambiguous, especially the definition of ‘rebates, discounts or commissions’.
His view is that the requirement relates only to the relationship between the agent and the vendor or purchaser, and not to third parties such as sign-makers or newspapers.
‘Our interpretation is that sales consultants have to be impartial and transparent in their transactions with all parties and we support this.
Our scale of charges is transparent right from the very first meeting with a client and all marketing costs are clearly set out when the sales consultants present their business plans to the vendor at the outset of any campaign,’ he said.
Barfoot & Thompson director Peter Thompson says his firm is seeking clarification from the Real Estate Agents Authority on what exactly has to be disclosed.
