How does real estate commission work in New Zealand?

How the fee is built

There is no regulated commission scale in New Zealand. The fee is whatever you and the agency write into the agency agreement, so two agencies can quote the same house differently and both are correct.

Agencies commonly express the fee as a percentage of the sale price. Some tier it, so one rate applies to the first band of the price and a different rate applies above that. Some quote a flat amount instead. A fixed administration or transaction charge is often added on top of whichever structure is used, and GST is added on top of the total.

When you are comparing two quotes, work each one out in dollars on a realistic sale price, including GST and the administration charge. Percentages that look close can land a long way apart once the structure is applied.

When the fee is earned and how it is paid

The agreement states the event that earns the fee and the point at which it becomes payable. Ask which event triggers it, because a sale going unconditional and settlement can be weeks apart, and check what happens if a sale falls over.

In practice the money usually moves through the deposit. Under section 122 of the Real Estate Agents Act 2008 the deposit is held in the agency trust account at a New Zealand bank, and under section 123 money received for a transaction cannot be paid out to anyone for 10 working days after the date it was received. The fee is deducted from the deposit and the balance goes to you, with the rest of the price settled through the lawyers on settlement day.

What has to be in writing

Section 126 of the Act says an agency has no entitlement to commission or expenses unless there is a written agency agreement signed by you and the agent. Section 127 says the agent must give you the Real Estate Authority approved guide, the New Zealand Residential Property Agency Agreement Guide, before you sign, and must get a signed acknowledgement that you received it. A copy of the signed agreement has to be given to you within 48 hours.

Marketing is charged separately from the fee and follows its own schedule. If a fee has been discussed but not written down, it is not agreed yet.