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Before you start a real estate agency, it is crucial to think about how to structure your business, to understand your legal and tax obligations and to decide how to promote your services and grow your customer database.

Lack of planning often prevents small businesses from succeeding. Therefore, as part of your business plan, you should:

  • research your target market;
  • define how you will differentiate yourself from larger agencies (lower price, higher quality service); 
  • understand your startup and operational costs; and
  • familiarise yourself with the regulations that apply to the real estate industry.

This article explains how to obtain a real estate licence in New Zealand and how to set up and protect your business.

Getting a Real Estate Agency Licence

There are three types of licences you can get in New Zealand to work in real estate: 

  • salesperson;
  • brand manager; or 
  • agent. 

To apply for any class of real estate licence, you need first to get a property degree. You can check a current list of recognised degrees on the Real Estate Authority website.

To obtain a branch manager’s or agent’s licence, you will need three years’ work experience in addition to your degree. You have to apply for your licence within ten years of completing your property degree, and you also need to complete an assessment. This assessment covers the sale and purchase agreements with The Skills Organisation.

When applying for a licence, you pay a one-off application fee. To maintain your licence, you have to pay two annual levies.

Setting Up Your Real Estate Agency

When you start a new business in New Zealand, you need to: 

  • make sure your business name is not already in use; 
  • protect your name and brand by registering your trade mark (optional);
  • decide on a business structure and register your business;
  • get an IRD number for your business and understand your tax obligations; and
  • get insurance for your business.

You can choose to set up your real estate agency as a sole trader, company or partnership. These are the three most typical business structures in New Zealand. Each of these structures has its own benefits.

For example, operating as a sole trader allows you to work on your own terms, and you can set yourself up relatively quickly and inexpensively. When you operate as a company, you have many financial advantages, such as:

  • limited liability;
  • lower tax rate; and
  • easier access to funds to allow you to scale your business. 

You can start your real estate agency as a sole trader or partnership, and switch to a company structure later down the track. In this article, we discuss these structures in more detail.

Once you have decided on your business structure, you will need to apply for a New Zealand Business Number (NZBN) and register your company (if applicable) with the New Zealand Companies Office.

Attracting New Customers

When you operate as a real estate agency, one of your most important assets is your customer base. Attracting new clients and growing your database can feel daunting at first, but as long as you have a sound strategy, once you get your first client, the rest should follow.

When you define your value proposition as a part of creating your business plan, think about what you will offer your clients.

For example, you may be offering a low cost, premium service. If so, make sure to communicate this clearly when you provide your services.

You can use digital marketing strategies to:

  • attract new leads into your funnel;
  • nurture them; and
  • convert them into clients.

For example, a well thought out content strategy generally includes a mixture of blog posts and social posts to attract visitors to your website. Here, you can then get their email addresses using free ebooks or resources, and nurture them into customers using automated emails.

Protecting Your Real Estate Agency

Obtain Business Insurance

Real estate professionals have some legal responsibilities towards their clients. Therefore, it is an excellent idea to protect your business from legal claims and costs arising from any potential disputes with your clients. Real estate agencies often use several types of insurance, including: 

  • professional indemnity;
  • public liability;
  • business insurance;
  • cyber liability; and
  • statutory liability.

Register a Trade Mark

You can protect your real estate agency’s name, brand and logo by registering a trade mark with IPONZ. We discuss the requirements of this application in this article.  

Some of the benefits of protecting your name and brand include having:

  • exclusive rights to use your trade mark within New Zealand;
  • legal protection to stop others from trying to copy your brand;
  • an intangible asset that increases in value over time; and
  • the option to sell or assign your trade mark to another person or business, or license its use to other parties.

You can protect your business name and brand indefinitely if you renew your trade mark every ten years.

Understand Your Legal Obligations

1. Your Agency Agreement

Before you receive payment from the vendor of the property, both of you have to sign an agency agreement. This agreement outlines:

  • the terms of the services you will be providing;
  • the cost for your services;
  • how you will receive your payment;
  • reasons for terminating or amending the agreement; and 
  • how to do this.

Before signing your agreement, you need to meet some legal requirements.

For example, you have to provide your price appraisal of the property to the vendor in writing, discuss the different options for selling the property, explain how you estimate your commission and provide a breakdown of your costs, including marketing and advertising. 

You should also inform the vendor if you have a conflict of interest and recommend obtaining legal and other advice before signing.

As part of protecting New Zealand’s reputation and economy from money laundering and the financing of terrorism, you will also need to confirm the vendor’s identity as you are selling a property on someone else’s behalf.

2. Your Duties of Disclosure

Before signing an agency agreement with the vendor of the property, you need to: 

  • discuss the importance of disclosing all relevant information to buyers; and 
  • the consequences of not doing so (the sale could fall through or they could face legal action after settlement due to non-disclosure).

Based on the outcome of this conversation, you can decide if you want to continue with the listing. As an agent, you have a fiduciary duty to your client. This duty prevents you from disclosing any problems with the property you are selling to buyers without the vendor’s permission. If the vendor does not agree to you disclosing important information, you have to terminate the relationship. 

You can use a non-disclosure agreement to protect both your business’s and clients’ confidential information.

3. Your Clients Personal Information

As a real estate agency, you will collect personal information about your clients, such as name, contact details, and personal preferences. You must protect this information, as outlined in the New Zealand Privacy Act.

Key Takeaways

From choosing a business structure to understanding your legal obligations, there are several essential things to do when you start a real estate agency in New Zealand. These include: 

  • getting a real estate license to operate; 
  • choosing your business structure; 
  • getting business insurance; 
  • protecting your name and brand; 
  • crafting a marketing strategy; and 
  • understanding your legal requirements. 

If you need help with setting up your real estate agency or drafting your service agreements, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

How do I start my own real estate agency in NZ?

To start a real estate agency in NZ you need to get a real estate license, choose a business structure, get business insurance and understand your legal requirements.

How do I get a real estate agent licence in NZ?

In New Zealand, you cannot start a real estate agency as an unlicensed person. You can apply for a salesperson, brand manager or agent’s licence. To apply for any class of real estate licence, you need first to get a property degree.

What is sole agency agreement?

A sole agency agreement is a written agency agreement with the buyer of the property. It generally sets out that you will be the only agent with the right to sell the buyer’s property.

What is the difference between a buyer’s agent and a seller’s agent?

The main difference between a buyer’s agent and seller’s agent is that they represent clients on either side of a transaction. As a buyer’s agent, you are representing the buyer’s interests and vice versa.

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