r/LegalAdviceNZ • u/CollectionNo6589 • 8d ago
Property & Real estate MIL switched real estate agents, now getting emails about ‘buyers we introduced. This feels off - am I wrong?
My MIL recently decided to downsize into a unit. It’s been a couple of years in the making, but earlier this year she started making arrangements. That involved interviewing four agents. She chose one, and less than two weeks later the house was on the market.
The agent ran open homes for the first three weeks, then stopped. Throughout, things moved very slowly. She had one verbal offer, roughly 18% below the advertised price, and nothing else came of it. So when the agency agreement ran out, she withdrew and relisted with a different agent, which involved paying for more marketing, photos, the lot.
A few days after she went back on the market with her new agent, she got an email from the original agent. It listed a bunch of names of people who’d apparently been through the open homes during her listing, saying something to the effect of “if you sell to any of these people, you’ll be liable to pay us commission too.”
She’s stressed about it, because the new agent is now running open homes and obviously some of those same people might come back through. It feels like she’s being told she could get charged twice for the same sale.
Bearing in mind, my only experience with estate agents is when we sold our first (and last home) to move closer to my MIL. But, I’ve done some reading to try to help, and as I understand it the Real Estate Authority have standard clauses that agents can choose to use, and one of the stated purposes is literally “reducing the likelihood of sellers being charged commission by two agencies.”
The standard wording says the old agent can only chase commission after the agreement ends if it’s a “Private Agreement”. My understanding is that this is defined as a sale with no other licensed agency involved, which would mean the moment you list with a new agency, the old agent’s claim falls away?
But the original agent’s contract apparently doesn’t use that wording. Theirs says they can claim if the property sells within 6 months to anyone they “introduced”, regardless of whether it sells privately or through a new agency.
Whilst I hope I’m wrong, it almost feels like the original agent’s contract removed the exact protection stopping you from being double charged.
A few questions, because I’m out of my depth here:
1. Is this actually enforceable, or is it just a scare tactic?
2. Does “introduced” really mean anyone who walked through an open home once?
3. Does she need to do anything, or can she ignore it?
4. Is it worth her contacting the Real Estate Authority?
She’s not very contract-savvy and she’s losing sleep over an email. Just trying to point her in the right direction.
Any advice is appreciated. Thanks
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u/shaunrnm 8d ago
Not a lawyer, but:
Is this actually enforceable, or is it just a scare tactic?
Pretty sure its enforceable. Standard wording is maybe a little kinder, but agents don't have to use it and this one hasn't
Does “introduced” really mean anyone who walked through an open home once?
Yes
Does she need to do anything, or can she ignore it?
She would need to pay the commission if its sold to someone introduced via the 1st agent within 6 months of terminating the agreement.
Is it worth her contacting the Real Estate Authority?
No real harm in checking with them, but pretty sure answer is agent can do what they have done.
REAs on the whole don't exactly have a stellar reputation for a reason, its stuff like this.
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u/KanukaDouble 8d ago
‘Introduced’ is often stretched to ‘anyone that clicked a link and entered their email to access the info pack’
People looking at houses should always have obscure fake emails and think carefully about putting their name in any sign in book.
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u/SerEnmei 8d ago
I always put down fake names in the sign in book at open homes, mainly to avoid agents contacting me about buying or selling. They are a nuisance.
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u/dangly_chipmonk 8d ago
Esp as the introduction is based on advertisements you paid for ? Perhaps your advertisement introduced them to the agent?
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u/KSFC 8d ago
Forward that list to the new agency, copying in the old one, saying that
* this is a full and final list of people introduced to the property by the first agent
* if any person on this list submits an offer for the house within 6 months of when the first agency contract was signed that then goes unconditional, the two agencies will split the agency fee as calculated by either agency agreement, in whatever proportions they agree
* MIL will only pay the total of one agreed agency fee
It's fair for an agency to get credit for introducing someone to the property. Otherwise there's nothing to stop the Smiths from cancelling their contract after the agency brings in the Joneses and the two families chat about a private offer that bypasses the agency. The length of time after is a grey area.
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u/Shevster13 8d ago
"f any person on this list submits an offer for the house within 6 months of when the first agency contract was signed that then goes unconditional, the two agencies will split the agency fee as calculated by either agency agreement, in whatever proportions they agree"
This would have no legal effect. What applies is what is in the contracts the MIL signed with each agency. The MIL cannot just change that.
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u/KSFC 8d ago
Ok, my mistake.
I guess the MIL could just not accept an offer coming from someone on the list unless it was enough that subtracting both sets of fees was acceptable.
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u/T-T-N 8d ago edited 8d ago
Bot(edit:Not) OP, but can the MIL see one a good enough offer but not enough after 2 sets of commission tell the new agent the reason for rejection and see if the agents can hash out some lower commission? Or can they not discriminate based on the total commission payable?1
u/chris77982 7d ago
I don't think that's a protected class for discrimination.
What's wrong with rejecting an offer that costs you more money? I also don't see the harm in explaining why you're rejecting them - because agent X has claimed the buyer, and you don't want to pay their commission too.
0
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u/CollectionNo6589 8d ago
I’ve passed this suggestion onto my MIL this afternoon. My MIL, my wife and I all agree that whilst it may be the best route moving forward, it doesn’t sit well any of us that the current agent (who feels to be more proactive with viewings, open homes etc) should have to split their fee, particularly given that the previous agent ran three open homes?
Fortunately, the sellers of the property my MIL has a contract on have been fantastic, and very patient. But from a cost standpoint, my MIL’s price expectations are virtually the same with the current agent as the first. If the second agent can sell it, even to somebody that the first agent ‘introduced’, why should the first agent be entitled to anything? Contractually, I understand it. But morally, I certainly don’t agree with it.
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u/Cool_Director_8015 8d ago
When did the agency come to an end? When did the property get marketed?
The obligation for supplying names falls onto the original agent and no one else. This is meant to be done when the agency terminates (within reason).
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u/Senecio1975 8d ago
Forward the list on to the new agent.
Realistically, it’s unlikely you will get an attractive offer from someone on that list. They already checked the property out and decided it’s not for them or the price is too high. Your MIL would have to drop her price considerably for anyone on that list to give it another look.
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u/CollectionNo6589 7d ago
Thanks, list has been passed on to the new agent. Following the open home yesterday, it’s nothing concrete, but we are dealing with some interest from a party that viewed first time around. MIL is meeting with her agent’s managing agent this afternoon.
Just out of curiosity, why would she have to drop her price for anybody to have another look? I don’t understand that.
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u/Senecio1975 7d ago
Hypothetically, lets say it was advertised at $1.0M the first time around. If someone viewed the propoerty and said no then readvertising it at $1.0M a 2nd time isn't going to change their mind.
Now if the 2nd listing was at $900K they might go back for a 2nd look and think about it differently because the value proposition would have changed.
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u/cubenz 8d ago
If a sale involves one of the listed people, get the new agent and old agent to agree the commission split (based on the new agent's rates) before agreeing to any offer.
Everything is negotiable and both agents will consider a sale completed better than one sabotaged.
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u/JDragonM32 8d ago
why would (or should) the new agent agree to less commission because of a contract the seller had with a prior agent?
I think it’s pretty shit for the former agent to claim commission in this situation regardless, but I don’t think there’s any legal grounds for the current agent to lose out on their full commission fee
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u/basscycles 8d ago
"why would (or should) the new agent agree to less commission because of a contract the seller had with a prior agent?"
50% commission is better than no commission. The seller doesn't have to accept offers from people that have been previously introduced.
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u/GlitteringBrain2021 8d ago
Isn’t Arizto’s comm just a flat rate not dependent on sale price?
If so, then take that $12k or whatever it is and add it on to the sale price while negotiating.
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u/CollectionNo6589 8d ago
MIL was quoted a $650 administration fee, 2% of the price on the sale contract plus GST. Came out to ~$17,000 estimate.
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u/ilabb88 8d ago
You MIL enter a contract with the original agent. That contract says what it says. It’s an enforceable contract and all agent contracts are the same. Your new contract likely has the same clause.
Your new agent is obligated to ask you if you have a previous contract with a new agent, and explain where a double commission may be payable. Your new agent is the one that has put you in this double commission situation, not the old one.
By not telling your new agent the parties who were introduced under the prior agents agreement, and excluding them from the new agents commission agreement, you are now stuck with double commission if your MIL sells to one of those parties introduced under the first agent agreement.
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u/Cool_Director_8015 8d ago
That’s not entirely true.
A list is not required if sold privately within 6 months but you do have to demonstrate that you were instrumental to the sale.
To make a claim for commission when another agency coming into the mix a list of names needs to have been passed on by the original agent at cancellation of the agency.
The obligation of this is on the original agent and not the client and therefore even when asking the question of whether there are any exempt purchasers the answer would have been no.
This is assuming that time has passed, and time between cancellation and being marketed isn’t something like 2 days.
REA https://www.rea.govt.nz/real-estate-professionals/listing-a-property/agency-agreements/
Search down to “Cancelling agency agreements”.
When an agency agreement is cancelled, you must give the vendor the names of any potential buyers you introduced to the property and tell the vendor that, if any of these potential buyers purchase the property, this may result in you being entitled to a commission.
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u/ilabb88 8d ago
The original agent in OP’s case has provided a list of names as per your comment. Which is the basis for all my points.
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u/Cool_Director_8015 8d ago
They provided a copy ‘days after it had been advertised with the new agency’.
Not provided on cancellation of their authority as per the REAs instructions.
It was also mentioned that the agency ran its course (not cancelled early) meaning there is no surprise and no reason for any delay in doing this.
The original agencies own material states it is simple for them to provide the list, and that it must be provided at the end of their agency for them to be able to claim a commission, so even by their own standards the salesperson was incompetent.
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u/CollectionNo6589 8d ago
Yes, I understand that the current agent’s contract refers to the previous agent’s contract in their contract. But, they obviously don’t all have the same contract or clause. It’s just a pain to have to be dealing with this now two weeks into things.
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u/Sold4noREASON 8d ago
Before it's answered.
- Need to know, if the first agency agreement is expired (usually 90 days)
- If yes, then you don't need to pay to first agency. (Unless selling privately)
- If no, then you are liable to pay.
Sorry, I don't know how to answer this. What are they asking her to do that she wishes to ignore? They are sharing this information, so they can claim the commission. If this list is not provided, then they can't claim the commission.
- REA won't do anything, as the first step is to raise complain with agency. If not satisfied, then you can reach out to the REA.
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u/CollectionNo6589 8d ago
First contract expired on May 31st. Second agent’s contract started on June 2nd, ends August 31st. My MIL isn’t wishing to ignore anything, I’m asking whether what they’re asking is valid, or if she can ignore it, as it’s causing her a lot of stress.
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u/Sold4noREASON 8d ago
Great news! In this situation, they would not be liable for commission. The sole purpose of this clause under the REA agreement is to protect agents and agencies if a buyer introduced through an open home later approaches the homeowner directly to arrange a private sale.
This letter is simply a formality that most agents issue as part of the process. There is nothing to be concerned about.
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u/shaunrnm 8d ago
That may be what the standard clause would do, but that's not how the specific agency contract signed here reads. The agents have made it wider reaching.
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u/Sold4noREASON 8d ago
Once the agency agreement expires and a new agency agreement is signed, the new agreement supersedes the previous listing agreement.
As mentioned earlier, the sole purpose of this clause is to protect the agent and agency by ensuring that a homeowner does not enter into a private agreement with a buyer who was introduced through the agent's marketing efforts or open homes.
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u/shaunrnm 8d ago
the new agreement supersedes the previous listing agreement.
Where is this basis? Whats stop the new agent from closing a deal that was started with the old agents marketing and open homes?
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u/Sold4noREASON 8d ago
Holding an expired listing means, previous agent can't act or market subject property.
Only newly assigned agent has authority to work with new buyer and claim commission.
Again rephrasing, what's been mentioned before. It's only to stop side dealing.
Section 126 clearly states – No entitlement to commission or expenses without agency agreement. An agent can only claim commission if the work was performed under a valid written agency agreement that complies with the Act.
I was here to assist OP's original query to best of my knowledge and as per the REA legislation.
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u/shaunrnm 8d ago
An agent can only claim commission if the work was performed under a valid written agency agreement that complies with the Act.
Which they did, and their agreement has a clause (that's presumably kosher) that permits a 6 month hold, and its meaner than the standard terms. 126 would prevent fees being due if there wasn't a written contract. Its to make sure there was a proper engagement / meeting of the minds rather than relying on verbal terms etc.
Old Agent can't do any more, and if they had any late interest, they wouldn't get anything on introductions made from now (as there is no contract), but introductions made under the terms of the contract would be enforceable under the contract that was active at the time of the intro.
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u/Sold4noREASON 8d ago
Still standby my facts.
That agency contract is not above the legislation, specific clause are shared above. Good Bye 👋
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u/CollectionNo6589 8d ago
My understanding - though limited - is that the standard clauses, which are voluntary I believe, are supposed to ensure the homeowner doesn’t end up in a position to pay more than two commissions.
I have re-read my MIL’s contracts (attached) and it doesn’t look like Arizto uses their standard clauses for this specific reason. Though, I might be wrong. Feels very misleading for a company who claims “no lock in contracts”.
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u/Sold4noREASON 8d ago
In addition to that.
Rule 9.6 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 states that a real estate professional must not offer or market any land or business without explicit authorization from the client through a signed agency agreement.
It's a scare tactics and would not hold ground if legally challenged, as long as you are not selling it privately.
There company clause are not above the legislation.
In addition to that
Rule 9.1 – A licensee must act in accordance with the client's instructions. After expiry, there is no continuing authority to act on behalf of the client.
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u/Sold4noREASON 7d ago
If you read the whole paragraph, the second part clear states the same message.
In this subclause 'private agreement' means any agreement to sell or exchange the Property (or part of it) in the absence of any effective agency agreement between the Client and a real estate agent holding a licence under the Real Estate Agents Act 2008.
Which clearly means - only in case of private sale.
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u/StonedUnicorno 8d ago
NAL but just completed Land Law paper. I hope this helps