There’s nothing wrong with having a casual conversation with the owner, is there? “I have some buyers who would be very interested in this property,” you might tell them. “Let me just bring them around for a look.”
You don’t have an agency agreement in place with the owner and a valid contract for sale hasn’t been prepared, but that’s OK isn’t it? If the buyer is really interested, you can always sort the documentation out later. What harm is there in giving a potential buyer a quick sneak peak? After all, it will show the owner how proactive you are. Right?
Before you can show a property to a potential buyer, you must have an agency agreement in place. No ifs, no buts – it’s a must.
If you show a property without an agency agreement in place, it can hit your hip pocket. Section 55(1) of the Property, Stock and Business Agents Act 2002 states that a licensee is not entitled to commission unless there is a written agency agreement in place.But it’s not just about commission.
Having a valid agency agreement doesn’t just secure your entitlement to commission, it also provides you with a range of protections should something happen during an inspection. What if the potential buyer trips down the front stairs and breaks their leg? What if they slip on the decking and hit their head on the edge of the pool as they fall in? The number of ‘what ifs’ is potentially unlimited.
The REINSW agency agreement provides you with comprehensive protection should a ‘what if’ arise. You are indemnified against any actions and claims made against you in the proper performance of your duties. Detailed privacy terms, work health and safety provisions and material fact disclosure requirements also ensure you are protected.
Contract for sale
A valid contract for sale is also a must before any inspection can take place.
Section 63(2) requires a valid contract for sale to be available for inspection at all times when an offer to purchase the property may be made. Under section 63(3), an agent is considered to offer a property for sale when, expressly or by implication, they indicate that the property is for sale or is to be auctioned at any future time, they offer to sell the property or they invite offers to purchase. If you fail to comply with section 63, you could be subject to a substantial penalty
Don’t risk it
While it may be tempting to show a property to a potential buyer before you have all the necessary documentation in place, you should never do it. It’s not worth risking your commission, opening yourself up to potential claims or facing the possibility of a penalty. Having processes in place at your agency to ensure both an agency agreement and contract for sale are in place before you start offering a property for sale will ensure you stay on the right side of the law.