Code of Ethics
REINZ Code of Ethics
- Members shall always act in accordance with good agency practices, and conduct themselves in a manner that reflects well on the Institute, its members, and the real estate profession.
- Members shall be loyal to the Institute and active in its work.
- Members shall be fully conversant with the Act, other legislation relating to real estate, and these rules, all of which must be adhered to at all times.
- It shall be the responsibility of licensed members to ensure that salespeople or employees engaged or employed by them are of good character and repute, and that their conduct is no less than that required of a member.
- Members shall never publicly criticise fellow members.
- When asked to express an opinion of a fellow member’s transactions by a principal, members shall render their opinion in accordance with professional courtesy and integrity.
- Members shall not make frivolous or vexatious complaints about other members and/or their salespersons.
- Whenever a conflict of interest arises, it shall be the duty of the member to disclose the conflict of interest to the member’s clients.
- Information communicated to a member by a principal, or otherwise received by a member on behalf of a principal, is confidential, and must not be disclosed unless permitted by the principal, or by operation of law.
- Members shall not accept instructions to carry out an appraisal unless they are competent to carry out such appraisal.
- Acceptance by a member, either directly or through a licensee by whom the member is engaged or employed as a salesperson, of any agency appointment imposes the obligation to render skilled and professional service.
- A member shall render services with absolute fidelity, honour and courtesy.
- A member must be fair and just to all parties in negotiations and in the preparation and execution of all forms and agreements, and protect the public against unethical practices in connection with real estate transactions.
In New Zealand the real estate agency industry is governed by the Real Estate Agents Act 1976. A real estate agency business may be conducted either by a sole practitioner, partnership or a limited liability company. A statutory body, the Real Estate Agents Licensing Board (REALB), is constituted to issue and renew licenses and also has disciplinary functions in that it is able to suspend or cancel licenses.
A real estate agency business may have a principal place of business plus any number of branch offices and employ any number of salespeople. A salesperson must have a Certificate of Approval issued by the REALB. To obtain registration a salesperson must complete the course of education plus be of good character. A branch office of a business must be supervised by a salesperson with Branch Manager status or somebody qualified to hold a license in their own right. A Branch Manager must have completed three years experience as a salesperson plus he or she must have completed further educational requirements. To be entitled to hold a license, an individual must have completed three years experience in the industry plus further education beyond Branch Manager requirements. A licensed real estate company must have an individual, known as a “Principal Officer” who is entitled to hold a license in their right, supervising the real estate agency business of their company.
Auctioneers of a real estate must in addition to a salesperson’s certificate, hold an auctioneer’s license issued under the Auctioneers Act. Real estate agents licenses and salespersons’ Certificates of Approval are renewed annually. There is no requirement for continuing professional development. Licenses are national in operation and an agency business may transact the sale or leasing of property anywhere in New Zealand. Salespeople are, however, subject to effective control requirements under the Act in that their real estate agency activities must be within the personal control of either a Branch Manager or Principal Officer. There are no local or regional restrictions.
It would be possible for a non resident agency or individual would be able to transact the sale of real estate in New Zealand but only from outside the Country. The Real Estate Agents Act only applies to individuals or companies operating within New Zealand. There are some overseas agencies marketing properties in New Zealand in conjunction with licensed New Zealand companies. Any advertising or promotion of a property in New Zealand could only be carried out by a New Zealand Licensee.
An individual holding a real estate license in New Zealand would have to have, at least, New Zealand residency. There is, however, no restriction on ownership of the shares in a company trading as a licensed real estate agent.
There are few controls on foreigners buying property in New Zealand. Overseas investors only face controls if they wish to buy large tracts of agricultural land. There are no restrictions to buying normal residential, commercial or industrial property. Foreigners can either buy existing property or build on land they have purchased.
Land Registration System
There is a “Torrens System” of land registration in New Zealand. The Land Transfer Act 1952 provides for State guarantees of registration of an interest in real estate and as to survey. Virtually all land in New Zealand is registered under this system although a few small pockets of properties are still registered under the old deed system which operated when the country was first settled by Europeans.
The register is available for search by the public and details of the registered proprietor, mortgagees, charge holders etc are fully available. The government has computerized the land registration system for the whole country and it is now possible to search all titles through the web and register new interests on line.
Other industry professionals
This information is currently being compiled by the ICREA-member association in this country.
In assisting a vendor of a property to obtain a sale, the agent will generally provide the following services :
- Inspect the property and provide the owner with an estimated sale price based on recent sale of comparable properties in the locality. A separate profession of valuers is also available to carry out this task and many vendors utilise the services of a valuer to ensure no conflict arises. Mortgage security valuations will always be carried out by independent valuers.
- The agent or salesperson will advise generally on market conditions and recommend how the property should be marketed. Approximately 90% of properties sold in New Zealand are sold through the Private Treaty process with the balance sold either through the auction process or less commonly by tender.
- Advice will be given on a marketing campaign to ensure maximum exposure of the property and the timing of that campaign.
- The agent will obtain full particulars of the property or business, including physical property and locality description, title details, local Council details and any specialist reports required (at the cost of the vendor), and take photographs or arrange for professional photography.
- Prepare and obtain vendor’s signature to agency agreement.
- Prepare all advertising and promotional material for the property obtaining vendor’s approval for wording. This would include brochures, newspaper or glossy advertising, signage on property and, on occasion, radio and television advertising.
- Arrange for viewing of property and/or hold “open for inspections” at the property at advertised times. Note: Most promotion of property in New Zealand centres round “open for inspections” and all viewing of the property is personally supervised by certificated salespeople. Proper records are kept of all persons who view a property.
- Provide information to interested purchasers, draft and obtain signatures to offers, arrange presentation to vendor and attend to negotiations regarding terms of sale, refer parties to legal advisers for advice where appropriate and obtain final signatures to contract.
- Facilitate inspection of property for valuers and any other specialist reports required.
- Obtain and hold in trust initial deposit (usually up to 10%) and forward copies of signed contracts to parties’ solicitors. Disburse deposit and forward invoice for commission upon contract being confirmed as being unconditional.
- Assist transfer of possession on settlement of sale and other incidental post sale follow-up.
Much of the foregoing will still apply. In addition, the agent will:
- Inspect the property and prepare detailed inspection reports regarding its condition and the condition of any chattels forming part of the tenancy.
- Receive rental application which would include full details of the perspective tenant along with credit checks where appropriate and obtaining approval of landlord.
- Prepare tenancy documentation. In the case of a residential tenancy, this would be on a standard residential tenancy form. In the case of commercial leases, a preliminary Agreement to Lease would be prepared by the agent. After signing this, formal Deeds of Lease would be prepared by the landlord’s solicitor.
- If the property is managed by the agent then ongoing management arrangements would then be put in place.
Property Marketing Systems
MLS marketing systems are not widespread in New Zealand. A strong grouping of individual real estate agency businesses operates an MLS system in the Auckland metropolitan region and almost all licensees in Christchurch belong to an MLS system. Many of the national franchise groups operate internal MLS systems. Those businesses share commissions on a contractual basis. Otherwise, individual arrangements regarding sharing of listings and sharing of commission from resulting sales operate on an ad hoc business throughout the country. As most listings are on a sole agency basis an introducing agency must first negotiate a commission sharing agreement.
Most if not all listing systems are now internet based. The major corporate franchise networks operate internal net based listing sharing systems which also serve as an advertising base to the public. The REINZ also operates RealENZ which is web based advertising medium. Most individual agency businesses now have their own web address and would link to the public through one franchise portal or through the RealENZ’s site.
Marketing of property in New Zealand generally follows the same patterns as would be seen in most western countries. Advertising and promotion would consist of the following:
- Signage on the property for sale or lease.
- Signage on the business’s own premises.
- Newspaper advertising.
- Coloured or black and white brochures and/or fliers.
- Agents own glossy magazines and/or newsletters.
- Mail outs to potential purchasers from agent’s own records.
- Internet based advertising on practitioner’s own website or through franchise or RealENZ’s portals.
- Radio/television advertising for specific developments. This is not common.
The role of the internet has grown to the point where today nearly all property for sale in New Zealand will at some point be marketed on the web. Sales of property to people attracted by internet advertising, especially overseas buyers, is now a significant part of New Zealand real estate agency business.
Formal referral systems exist in New Zealand through individual groupings of agents such as franchise groups. They are not a strong part of the New Zealand market and arrangements are usually regional or local. Fee sharing would be on an agreed basis.
Financial institutions are also offering rewards for referrals and these are now becoming a stronger source of income for real estate agency businesses. It is a requirement under New Zealand law that the person being referred to the financial institution consent to the referrer, the agent, receiving a commission
Relationship of Buyer/Seller to Practitioner
Real estate agents in New Zealand engage in the sale of residential property, commercial and industrial properties, businesses and rural property. They also engage in the letting and leasing and management of residential and commercial investment property.
In New Zealand real estate agents generally act for the vendor (seller) or landlord of the property under a written and signed agency agreement between the agent and the owner of the property. In rare instances, the agent may act for the purchaser or lessee of the property. The law in New Zealand requires the agent to have a written contract of agency which also specifies the fees payable before the agent can sue for a commission. .
The agency relationship between the agent and the vendor/landlord generally requires the agent to promote the property on the vendor’s/landlord’s behalf, to introduce buyers/tenants to the property and to negotiate contracts of sale/lease. The agent is not empowered to sign any contract of sale/lease on behalf of the vendor but may be empowered to sign residential tenancy agreements on behalf of the landlord. .
The most common form of agency arrangement is a “sole agency” where only one agent is appointed. “Joint sole agencies” are sometimes entered into where, say, two agents market the property and “general agency” is also quite common where several agents will be marketing the same property. The whole of the commission is generally paid to the agency that negotiates a successful sale of the property, but commission sharing arrangements are also quite common among “multi list” agencies.
In most agency relationships, where the agent is contractually bound to the vendor through the signed agency agreement, the agent’s prime responsibilities in law will be to the vendor/landlord. However, there is substantial consumer legislation in New Zealand protecting the rights of the purchaser/tenant to be treated fairly. In a buyer agency relationship, the rights of the buyer will also be protected under the contract of agency. In most cases where an agent acts for a buyer, there would also be another agent acting for the vendor and both vendor and buyer would pay the fees of their respective agents.
Selling or purchasing real estate New Zealand, particularly those from the United States, should realise that the mandatory disclosure rules which particularly apply in the United States do not apply in New Zealand. Broadly speaking, the concept of “caveat emptor” (let the buyer beware) still operates in New Zealand and the form of contract for sale and purchase of real estate that is used throughout New Zealand is specifically designed so that the contract can be made conditional upon the buyer investigating and being satisfied with such things as the structure of any buildings on the property, Town Panning issues and the accuracy of any representations made in regard to such matters as leases and turnover of business properties. There is a Fair Trading Act which is specifically enacted to ensure that those engaged in trade such as real estate agents do not engage in any deceptive conduct
Generally, the vendor pays the agent’s fees which are almost always on a percentage basis. With commercial leases, the landlord generally pays the agent’s fee on a percentage basis, but with residential lettings, the fee, which generally equates to one week’s rent, is usually paid by the tenant.
Payment is due, in the case of a sale, lease or letting, as soon as the agent has procured an unconditional and enforceable contract for the vendor or landlord. If the purchaser or lessee subsequently defaults on the contract and does not settle the sale or lease, then the fee is still payable. “Settlement” generally equates to the giving and taking of possession, along with payment of the balance of the purchase price in the case of a sale.
Real Estate agents’ fees in New Zealand are negotiable, scale fees having been removed in the late 1980s. Typical fees on a scale would generally be in the range of 3.5% – 4% plus GST. Residential tenancy would generally attract a fee of one week’s rent plus GST and a commercial letting would attract a fee of around 13% – 15% of the annual rental depending on the term of the lease. All fees to real estate agents in New Zealand attract Goods & Services Tax at 12½% of the fee.
A basic level of advertising is usually paid for by the real estate agent from its own resources, but special advertising and promotion campaigns are frequently paid for by the vendor by special arrangement with the agent. These costs will be payable regardless of whether a sale or lease takes place.