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What To Include in a Real Estate Agency Agreement

An Agency Agreement is the foundation of a successful working relationship between real estate agents and clients looking to sell their property. This agreement outlines the terms and conditions of your collaboration and sets the stage for a transparent, efficient, and legally sound transaction. The specific components required in an Agency Agreement will change depending on the state or territory you operate in. This article discusses the essential features of all Agency Agreements in Australia. 

What Are the Types of Agency Agreements?

It is crucial to select the correct type of Agency Agreement to best suit you and your client. The type of Agency Agreement you select will dictate what key features should be included in the contract. The type of Agency Agreement can differ depending on where you are in Australia. 

The table below outlines: 

  • the critical types of Agency Agreements; 
  • when they should be used;
  • their commission structure; and 
  • the state or territory they are formally recognised in. 
Agreement TypeAgreement PurposeCommission Applicable state or territory 
Exclusive Agency Agreement Creates an exclusive right with one agent to sell the property. Other agents are unable to sign an Agency Agreement with the same client during an active exclusive Agency Agreement.Commission must be paid to the exclusive agent. NSW, VIC, QLD, TAS, ACT 
Auction Agency AgreementCreates an exclusive right with one agent to sell the property at auction.The commission must be paid to the exclusive agent. NSW, VIC, QLD
Sole Agency Agreement Creates an exclusive right with one agent to sell the property but also allows the client to find a buyer themselves.The commission is only payable if the agent finds a buyer. There is no commission payable if the client finds their own buyer. NSW, QLD
General Listing/Open Agency Agreement Creates a non-exclusive right to list a client’s property. The client can engage multiple agents simultaneously. Commission payable to the agent who finds the buyer. NSW, VIC, QLD, TAS, ACT
Multiple ListingSuitable for agents that work as part of a network. This covers both auction and private treaty. Commission is payable to the agent that signs the Agreement but is usually split between other agents within the network. NSW

South Australia, Western Australia and the Northern Territory do not distinguish between different types of Agency Agreements. However, the Agency Agreements in these states should set out the rights and obligations of the parties by reference to the key features identified below.  

What Are the Key Features of an Agency Agreement?

Regardless of the type of Agency Agreement you select, consider including each of the following features discussed below.

Clear Identification of the Parties and the Property

A fundamental element of any Agency Agreement is a clear identification of the parties involved. This should include the:

It should also include comprehensive details about the property being sold, including its:

  • address;
  • legal description; and
  • any relevant special features.

Accuracy in property description helps prevent misunderstandings and disputes down the line.

Exclusive or Non-Exclusive Agreement

Your Agency Agreement should clearly set out whether it is an exclusive or non-exclusive Agreement. An exclusive Agreement grants the agent sole rights to market and sell the property during a specified period. 

However, a non-exclusive Agreement allows the owner to engage multiple agents simultaneously. Your Agency Agreement should always expressly state whether exclusivity applies. 

Duration of Agreement

Clearly stipulate the duration of the Agency Agreement, including the start and end dates. This timeframe is crucial, particularly in exclusive arrangements, as it will determine how long the agent will have exclusive rights to try to sell the property. Agents should be prepared to discuss the optimal duration based on market trends and the property’s unique characteristics.

Cooling Off Period 

Depending on your state or territory, you may have a mandatory cooling-off period that allows a client to change their mind after signing an Agency Agreement. Consider the mandatory requirements in your jurisdiction and include them in your Agency Agreement.

Termination and Withdrawal

Include provisions for termination or withdrawal from the Agreement by both parties. Detail the conditions under which either party can terminate the Agreement before its expiration date. This might include breach of terms or dissatisfaction with services. This section helps manage expectations and provides an exit strategy if needed.

Estimated Sale Price 

An Agency Agreement should include an estimated selling price for the property. Depending on where you are located, you may have specific restrictions about how you can express the estimated sale price. 

For example, if providing a price range to your client, you may have state or territory-specific restrictions on how large the price range can be.

Commission Structure and Fees

The commission structure outlines how much pay you will receive upon successful completion of a sale. Commission rates can vary depending on where you are located. However, it is essential to specify whether the commission is a fixed amount or a percentage of the property’s sale price. You should also outline any additional fees or charges that the client may incur, such as marketing expenses.

Scope of Authority

The Agency Agreement should specify the tasks the agent is authorised to undertake, such as: 

  • marketing, 
  • negotiations, and 
  • property inspections. 

Clearly delegating responsibilities helps manage client expectations and minimises the risk of potential conflicts.

Marketing and Advertising Strategies

It will be helpful to detail the strategies you plan to employ for marketing and advertising the property. This could include: 

  • online listings; 
  • open houses; 
  • brochures; and 
  • social media promotion.

Transparent communication on marketing efforts reassures clients that you will actively promote their property in the market.

Privacy and Confidentiality

Australia has stringent privacy laws, and it is crucial to include provisions in the Agency Agreement that ensure compliance with these regulations. This section should outline how client information will be: 

  • handled;
  • stored; and 
  • shared in accordance with applicable laws.
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Key Takeaways

Crafting a well-rounded Agency Agreement is a crucial step for real estate agents to establish a solid foundation for successful transactions. This legal document serves as a roadmap for the collaboration between agents and property owners, ensuring transparency, accountability, and effective communication throughout the process. You should always consider the specific requirements that may apply in your state territory. However, by including the basic essential components discussed in this article, you can be sure to create a smooth relationship with your clients. 

If you need assistance understanding the requirements for an agency agreement in your state or territory, our experienced real estate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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Phoebe Chester

Phoebe Chester

Practice Leader | View profile

Phoebe is a Practice Leader in LegalVision’s Corporate and Commercial team. Phoebe has accumulated 6 years of valuable experience in the legal profession as a paralegal and lawyer working at a top-tier law firm, specialising in intellectual property and in-house in the medical scientific research field.

Qualifications: Bachelor of Laws (Hons), Bachelor of Arts, University of Notre Dame.

Read all articles by Phoebe

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