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Methods of sale
Here is a description of the most common methods of sale, and the considerations of each:
Sole or Exclusive Agency
Auction
Open Listing
Sole or Exclusive Agency
The REIQ recommends these methods of selling property as two of the most effective.
By appointing a real estate agent on the basis of a Sole or Exclusive Agency agreement, the seller should limit themselves to one agent selling their property to potential buyers.
This can be advantageous as the one agent may be more focused on selling your property for the best price possible by virtue of the fact that he or she does not have to compete with other agents. Under the new Property Agents and Motor Dealers Act (PAMD) 2000, a seller can only appoint an agent under this arrangement for up to 60 calendar days. During those 60 days the seller can decide not to renew the appointment if the property has not sold.
However, the seller can agree to make a further 60 day appointment but the renewal cannot be made earlier than 14 days before the term expires.
If the seller succeeds in selling the property by their own efforts, they are not required to pay the original agent any commission if it is a sole agency. Under an Exclusive arrangement, the sellers pay commission to the agent regardless of whether the sellers sell the property themselves.
The Sole or Exclusive Agency method is recommended over the Open Listing method because the sale of the property is in the hands of one party only, saving the seller the confusion of having to liaise with more than one agent. Furthermore, this will save the seller the money and time involved in advertising and marketing costs when a number of agents are trying to sell the property.
Under any selling arrangement using a real estate agent, the seller and agent must sign a PAMD Form 22a - Appointment of Real Estate Agent (Sales and Purchases) in order to legally set the terms of the selling agreement.
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Auction
Selling by auction is also an Exclusive Agency agreement and is therefore also subject to the 60 calendar day agreement period. The auction process requires the seller to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers.
Under the auction system, the seller agrees to pay commission to the listing agent if the property sells before the date of the auction, at the auction or in an agreed period after the auction.
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Open Listing
An open listing is where the seller lists their property with a number of real estate agents in the local area.
Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.
Only the agent that introduces the buyer to the property will receive the commission from the seller.
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