What type of agency agreement allows a property owner to engage multiple real estate agencies to market their property?
Correct Answer
B) General agency agreement
A general agency agreement allows the property owner to engage multiple real estate agencies to market their property simultaneously. Under this arrangement, only the agency that successfully sells the property earns the commission.
Why This Is the Correct Answer
A general agency lets the vendor appoint more than one agency at the same time, with commission payable to the agency that effects the sale. Rule 9.10 requires licensees to warn vendors that signing several agency agreements could expose them to more than one full commission.
Why the Other Options Are Wrong
Option A: Sole agency agreement
A sole agency appoints one agency, and commission is payable on any sale during the term.
Option C: Buyer's agency agreement
A buyer's agency agreement appoints an agent to act for a purchaser (Rule 11), not a vendor listing with several agencies.
Option D: Conjunctional agency agreement
A conjunctional arrangement is between agencies sharing a sale and its commission, not an agreement that lets a vendor appoint several agencies.
Deep Analysis of This Agency Practice Question
General agency gives the vendor the widest exposure and freedom, including selling privately without commission, but each agency has less incentive to invest in marketing. Sole agency gives one agency security, because commission is payable on any sale during the term. Agencies can still cooperate on a sole listing through a conjunctional arrangement, which is a deal between agencies, not a separate vendor agreement.
Background Knowledge for Agency Practice
New Zealand vendor agencies are sole agencies or general agencies; 'exclusive agency' is a United States and Australian label. Sections 130 and 131 of the Real Estate Agents Act 2008 give special cancellation rights for sole agencies. A buyer's agency agreement, covered by Rule 11 of the Client Care Rules, appoints an agent to act for a purchaser.
Memory Technique
General agency: many agencies, the one that sells is paid, and a private sale is free. Sole agency: one agency, paid on any sale in the term.
When a question mentions several agencies marketing the same property for the vendor, think general agency.
Exam Tip for Agency Practice
Several agencies at once for a vendor means a general agency; one agency paid on any sale means a sole agency.
Real World Application in Agency Practice
A property owner in Auckland wants maximum market exposure for their luxury home. They sign general agency agreements with three different agencies - one specializing in luxury properties, another with strong international connections, and a third with excellent local market knowledge. Each agency markets the property independently, and whichever agency brings a successful buyer earns the full commission. This approach maximizes exposure while maintaining competitive pressure among agencies to perform.
Common Mistakes to Avoid on Agency Practice Questions
- •Using 'exclusive agency' as if it were a New Zealand agency type
- •Confusing a conjunctional arrangement between agencies with a vendor agreement
- •Forgetting the double-commission warning in Rule 9.10
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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