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Importance of the Real Estate Agents Authority Code of Conduct
The New Zealand Code of Conduct for real estate agents outlines minimum standards that real estate professionals must abide by when conducting business. They apply to licensed agents and their businesses. The rules were updated in 2012 and officially came into effect in April 2013. It’s important for those working in real estate to understand their obligations under the new rules and any adjustments that may need to be made to business practices.
The code of conduct is specifically designed by the Real Estate Agents Authority, an independent organisation within New Zealand that regulates the real estate industry. Their purpose is to help all parties understand the process of buying and selling a property. They also promote a high level of service and professionalism within the industry. The Code of Conduct outlines the obligations NZ real estate agents have during the process of acquiring and purchasing a property.
Key Rule Changes
Specific changes to the code of conduct relate to standards of professional competence for real estate agents. Many rules remain the same from the previous installation in 2008, but there are some key new rules that real estate professionals are required to follow.
Obligations to Clients
- Real estate agents must explain when an agreement with a customer will end
- Real estate agents must recommend to all parties, buying and selling, that they seek legal advice before signing a purchase and sales agreement
- Explanations must be submitted in writing to the client when there is no comparable sales data for which to base an appraisal.
Real Estate Agency Obligations for their Business
- Before an agency agreement is signed, the real estate professional must explain to the prospective client that how they choose to sell the property can impact the benefits the agent receives.
- An amendment was made to the disclosure of defects procedures to include a more consistent test on whether an agent should know about a hidden or underlying defect and clarify the need for evidence, or expert advice, when seeking confirmation from a client that there are no hidden defects.
- Real estate agencies must provide training for agents to ensure they understand the new terms of the code of conduct and adjust business processes to accommodate the new rules.
The Importance of the Code of Conduct
The code of conduct is important because it outlines explicit standards and practices for all real estate agents and businesses to abide by. It sets minimum requirements in place to ensure that all real estate transactions are lawful and fair and that all parties involved, in the buying and selling transactions, are properly represented and legally protected.
The code of conduct applies to licensed agents in New Zealand and real estate salespeople. Usually, real estate agents in New Zealand work on behalf of the seller and are paid by the seller. However, these rules do also apply to buyer's agents.
When real estate agencies follow the new rules outlined in the code of conduct, they can be assured that their business is operating properly within industry standards for professionalism. This can help contribute to repeat business and lack of compliance hassles for an agency or individual.
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