Which type of agency agreement allows a vendor to sell their property themselves without paying commission to the agent?
Correct Answer
B) General agency agreement
A general agency agreement allows the vendor to sell the property themselves without paying commission to the agent, while also allowing multiple agents to market the property. Only the agent who actually sells the property earns the commission.
Why This Is the Correct Answer
Under a general agency the vendor may appoint several agencies and pays commission only to the one that effects the sale, so a private sale to a buyer no agency introduced attracts no commission. Under a sole agency, by contrast, commission is payable on any sale during the term.
Why the Other Options Are Wrong
Option A: Sole agency agreement
Under a sole agency, commission is payable on any sale during the term, including one the vendor arranges privately.
Option C: Conjunctional agency agreement
A conjunctional arrangement is between agencies sharing a sale; it is not a vendor agreement that permits private sales without commission.
Option D: Multiple listing agreement
'Multiple listing' is an overseas label for shared listing systems, not a New Zealand agency type that governs private sales.
Deep Analysis of This Agency Practice Question
The two New Zealand vendor agency types sit at opposite ends of a trade-off. A general agency keeps the vendor's freedom: several agencies, and a private sale owes nothing. A sole agency gives the agency security: one agency, and any sale during the term, including a private one, owes commission. Questions about a vendor selling 'themselves' are testing exactly this difference.
Background Knowledge for Agency Practice
New Zealand vendor agencies are sole or general agencies; 'exclusive agency' is a United States and Australian term. Sections 130 and 131 of the Real Estate Agents Act 2008 give special cancellation rights for sole agencies, and Rule 9.10 requires licensees to warn that signing more than one agency agreement could mean paying more than one commission.
Memory Technique
General agency: the vendor stays free, including to sell privately without commission. Sole agency: the vendor pays on any sale in the term.
When a question asks which agreement lets the vendor sell privately without commission, the answer is the general agency.
Exam Tip for Agency Practice
A private sale by the vendor is commission-free under a general agency but not under a sole agency.
Real World Application in Agency Practice
Sarah lists her property under a general agency agreement with three different agents. Each agent markets the property actively. After two months, Sarah's neighbor expresses interest and they negotiate a private sale. Under the general agency terms, Sarah can complete this sale without paying commission to any of the agents, as none of them introduced the buyer. The agents understand this risk when accepting general agency listings.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking a sole agency lets the vendor sell privately without commission
- •Using 'exclusive agency' as a New Zealand agency type
- •Confusing a conjunctional arrangement between agencies with a vendor agreement
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?
People Also Study
Property Law & Legislation
56 questions
Sale & Purchase Process
63 questions
Professional Conduct & Ethics
46 questions
Property Management
85 questions
Related Study Resources
Previous Question
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Next Question
A developer lists 12 new townhouses in one continuous development with an agency under a 6-month sole agency. After 100 days the developer wants to cancel under s 131. What is the likely position?