The kitchen-table sole agency: appraisal, copy and cancellation
Margaret, a 72-year-old retired teacher, lists her 1970s three-bedroom home with Daniel of Summit Realty. At the kitchen-table appointment Daniel tells her she will 'easily get $850,000' but gives no written appraisal or comparable sales. Margaret signs a 150-day sole agency at 4.0% plus GST, with $1,500 marketing. Daniel does not leave a copy of the agreement. Two weeks later Margaret's son arrives from Australia, reads the agreement, and says his mother feels rushed and wants to cancel. Daniel replies that the sole agency runs for 150 days, that the $1,500 marketing is already spent, and that he will hold her to the term. Margaret's neighbour then lists with another agency at 3.2%. Margaret asks Daniel to release her. Daniel says he will 'think about it' but continues advertising the property. The property has not yet had an open home and no written offers have been received.
1. Identify the client care and agency agreement failures in Daniel's conduct. What should he have done at and after the listing appointment?
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Daniel failed at the listing appointment in several connected ways:
- No written appraisal. A salesperson must give the client a written appraisal supported by comparable evidence before the agency agreement is signed. A verbal 'easily $850,000' is not enough and may mislead Margaret about price.
- No copy of the agreement. The agency agreement must be in writing, signed by the client, and a copy must be provided to the client. Daniel left without giving Margaret a copy, so she had no practical chance to review the term, commission, or marketing cost.
- Term and cost not properly explained. A 150-day sole agency is a long lock-in. Daniel needed to explain the commission (4.0% + GST), the $1,500 marketing, the expiry date, and how Margaret could cancel or change the agreement. He should not have presented a long sole agency as the default.
- Pressure and no client-interest analysis. Margaret is elderly and felt rushed. Daniel should have encouraged her to take advice and should have recommended a term that matched her needs.
After the appointment he should have delivered a copy immediately, recorded the instructions, and not advertised until the agency agreement and marketing authority were properly documented.
2. Is Margaret bound by the 150-day sole agency? Explain the enforceability issues and the commission/marketing cost position.
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Enforceability depends on more than the signature. Under the Real Estate Agents Act 2008 and the Client Care Rules, an agency agreement must be in writing and the client must be given a copy. If Daniel cannot show that Margaret received a copy and that the terms were explained, Summit Realty's ability to rely on the 150-day term and to claim commission is weak. The 150-day sole agency may also be challenged as not in Margaret's interests, especially when she was rushed and no written appraisal was given.
Commission is generally payable only when the agent has earned it under a valid agreement - for example by introducing a ready, willing, and able buyer during the term. No written offers have been received, so there is no obvious commission entitlement yet. The $1,500 marketing is a different issue: the agency must show the cost was authorised and actually incurred. Even then, it should not be used as a bargaining chip to trap Margaret in a long agency. Daniel should release Margaret from the sole agency, provide the copy and records, and negotiate any genuinely incurred marketing cost. Holding her to 150 days after these failures risks an unsatisfactory conduct finding.
3. What should Daniel and Summit Realty do now to remedy the situation?
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Summit Realty should:
- Release Margaret immediately from the sole agency and confirm this in writing.
- Provide all records - the signed agreement, appraisal (if any), marketing authority, and invoices.
- Stop advertising the property and remove online listings.
- Refund or substantiate the $1,500 marketing; do not deduct it without a proper contractual basis and evidence of spend.
- Refer the matter to the branch manager for supervision review and consider reporting to the agency's compliance officer.
- Apologise to Margaret and her son and explain the agency's complaints process.
- Record the lessons: no agency agreement without a written appraisal, a copy given at signing, and a clear explanation of term and cancellation.
The remedy should put Margaret back in the position she should have been in: informed, unpressed, and free to choose another agency.