Selling guide

Sole agency vs general agency agreements: pros and cons

Do you want one dedicated agent, or many potential avenues to sell?

Last updated: 18 December 2024

There’s plenty to love about working with a real estate agent to sell a property in NZ. These professionals have in-depth knowledge of local property markets, understand what features of a home to emphasise to maximise its appeal, and have networks of buyers that they can tap once your home is in market.

It’s important when choosing a real estate agent to know what’s expected from you (and from them!), and also understand the contract you’ll sign. This document will lay out a lot of important information regarding the services they’re agreeing to provide you with, and also your end of the bargain.

One of the most important differences between the different types of real estate agreements is between sole and general agency agreements. Here, we’ll explore what each means, and their pros and cons.

What is an agency agreement, and what should it contain?

In the world of selling property in NZ, an agency agreement is a legally binding contract between you (the property seller) and the agency/agencies you’re using to help you sell.

It’s crucial that you read and understand your agency agreement, and also seek legal advice from a property lawyer prior to signing it.

There are always some differences in the content of agency agreements between different real estate agencies. However, all NZ agency agreements should include the following:

Details about your home
- Its address
- Property details (e.g. its size)
- Chattels that will be sold with the house (e.g. whiteware)

Details of those involved in the agreement
- Your name, address and contact info
- Your lawyer’s/conveyancer’s name and contact details
- The name of the lead agent who will work on selling your home
- The agency’s name and address

Details of what responsibilities you’re giving the agency
- You get to choose what the agency does, which might include:
- Arranging open homes
- Receiving deposits on your behalf
- Advertising your home for sale

The type of agreement and its duration
- Whether it’s a sole or general agency agreement
- When the agreement starts and ends, and how it will end

Proof of who has the authority to sell your home
- E.g. If you're a co-owner of the home, everyone must sign the agreement, or you must demonstrate legal authority to sign for everyone.

Proof you’ve received a copy of the REA guide
- The Real Estate Authority (REA) has produced a guide to help you understand your rights and responsibilities when working with an agent. The agent is legally obliged to give you a copy of this before you sign an agreement.

You need to read and understand every element of your agency agreement.

What’s the difference between a sole agency and general agency agreement?

If you sign a sole agency agreement, only the individual agency named on the document is able to market and sell your property. If you then signed up to another sole agency agreement with a different real estate agency, you might end up on the hook to pay commission to both agencies if the house sells.

In a general agency agreement, multiple real estate agencies can be working on marketing and selling your home at the same time. You’ll only end up paying commission to the agency that’s successful in finding a buyer.

The pros and cons of sole vs. general agency agreements

Like many of the other steps in selling a home in NZ, there’s not necessarily a right or wrong approach when deciding between a sole or general agency agreement. Chances are, if you speak to people who’ve tried one or the other approach, they’ll have vastly different experiences, and might advise you in completely opposite directions.

This is partly because the NZ property market is highly dynamic, and changes frequently. So, someone who tried and failed to sell with a sole agreement, and succeeded with a general agreement (or vice versa) might think that this improvement was due to the nature of their agency agreement, when in fact it was to do with macro market factors.

So, what we’re going to present here are a few of the perceptions that people have about the pros and cons of different agency agreement types, so that you can make a more informed decision.

How many for sale signs could you tolerate in your garden?

Sole agency agreements: pros and cons

Pros:

You have a really dedicated agent who’s highly proactive in trying to sell your home
You only have to deal with one agent (and their team). Given how important communication is with agents, this can be a real time saver.
You won’t have multiple agents trying to organise open homes, which can be disruptive if you’re still living in the property.
You’ll have less paperwork to sign and keep track of.
Collecting marketing materials (e.g. photographing your home) will only need to happen once.

Cons:

Fewer agencies working on your home might mean fewer prospective buyers see it.
If your agent isn’t pulling their weight, you don’t have an immediate fall back plan. While possible to change agents, this isn’t always easy – remember, the contract is legally binding.
If you want to change your mind and list as a general agreement, you’ll have to wait for your sole agreement to expire.

General agency agreements: pros and cons

Pros:

More agents and agencies = more potential for buyers to see your property listed.
For example, each agency will likely display your home in their window.
Competition between agents could make them pull out all the stops to try and claim the commission for selling your home first.

Cons:

Some worry that their home can be lost in a large pool of properties when listing with general agreements, and that agents are less motivated because there’s a chance someone else will get the commission. This can mean the property stays on the market for longer than it should do.
There’s a chance that multiple agents will context the commission, which can draw out the process.
You risk paying double commission if you don’t sign the clause that protects you against this.
You’ll have to do more communication, and deal with more paperwork from the various agencies involved.
You will likely have to accommodate multiple open home sessions.

Remember, the above points reflect the perceptions that exist around the sole vs. general agency agreements. Ultimately, the decision is yours, and should reflect the way you want to go about selling your property.

Unsurprisingly, most real estate agents will want you to sign sole agreements with them, so that there isn’t the risk of someone else making the sale. However, if an agency feels like they might be your second choice, they might push for a general agreement, so that they still have a shot. So, be prepared for the pressure in both directions, and make sure you stick with what is right for you.

Author

Al Hall

Al Hall is a regular contributor at Trade Me Jobs and Trade Me Property. He’s dedicated to helping people succeed in their aspirations to find their dream job and place to live.