New legislation in the form of the Property Occupations Act 2014 commences on the 1 December 2014. The law currently caps the amount of commission an agent can charge for residential or rural property transactions at $900.00 plus 2.5% of the purchase price which exceeds $18,000.00, but the new Act will abolish the maximum amount for commission that agents can charge. There will no longer be a need for agents to disclose their commission and other benefits to buyers and agents will be able to negotiate the commission with their clients.
A deregulated system will allow property agents to differentiate themselves in the real estate market on the basis of price as well as services. Currently consumers need to pay an agent commission for selling or letting their home or investment property which must be set in writing when the agent is appointed. This is usually a percentage of the sale price. You can negotiate the commission with your agent but it cannot exceed a certain amount.Most agents simply charge the maximum amount without negotiation taking place. The deregulation as a result of the Property Occupations Act means that consumers will be more likely to negotiate with agents about their commission, and choose their agent on the amount of commission they charge as well as additional services on offer.
Property Agents and Resident Letting Agents must still disclose their fees and commission, and all other charges. Some agents will offer a higher level of service and will charge higher commissions. Many agents have for years charged a five (5%) commission for off the plan contracts by structuring agreements in two (2) parts. Firstly, 2.5% for commission and 2.5% for marketing. Now they will simply be able to charge 5%.
Agents will also be able to charge a commission if they have a beneficial interest in the sale. However, they must act fairly and honestly in relation to the sale. The seller must sign a form to confirm they understand and that they know about the beneficial interest and agree to the sale.
