ENGAGING AN AGENT IN QUEENSLAND? WHAT SHOULD YOU CHECK WHEN SIGNING A FORM 6 AGREEMENT?
When selling a property, one of the first steps will be to engage a real estate agent to market and sell the property on your behalf.
To engage the agent, you will need to sign a “Form 6 Appointment and reappointment of a property agent, resident letting agent or property auctioneer”.
UPDATE MAY 2024 | NEW REIQ FORM 6 AGREEMENT
The Real Estate Institute of Queensland (REIQ) released an updated Form 6 agreement which should be used from 1 May 2024. If you are engaging an agent from 1 May 2024 you should ensure the new Form 6 Appointment Form and new Residential Sales Schedule are used.
WHAT HAS CHANGED:
The new Residential Sales Schedule consists of a Property Details and Disclosure Annexure and a Marketing Information Annexure.
The Property Details and Disclosure Annexure captures information about the property that is essential for completing the contract of sale and ensures the necessary disclosure is made (in line with the disclosure requirements / warranties under the REIQ sale contract).
The Marketing Information Annexure captures information about the physical features of the property, the details of which are needed when listing the property for sale.
Under the new Residential Sales Schedule, sellers will need to warrant that the information provided to a sales agent is correct and will need to indemnify the agent against any claims that may arise from a breach of this warranty.
We have set out below key items you will need to consider when signing this form:
PART 1 – CLIENT DETAILS
Ensure your name is spelled correctly and matches the details recorded on the property title. You will need to provide the agent with photo identification and proof of your ownership (e.g. title search) or authority to deal with the property (e.g. power of attorney).
PART 2 – LICENSEE DETAILS
The agent will complete this section with their details.
PART 3 – DETAILS OF PROPERTY OR BUSINESS THAT IS TO BE SOLD, LET, PURCHASED OR MANAGED
Ensure the address, lot, plan and title reference are listed and correct. These details can be found on the title search.
PART 4 – APPOINTMENT OF PROPERTY AGENT
Select the service you have appointed the agent to perform, the term of the agent’s appointment and set a reserve or list price.
PART 5 – TERMINATION OF APPOINTMENT
Ensure you are aware of when you can terminate the appointment, depending on the type of listing you select (in Part 6).
PART 6 – PROPERTY SALES
Select the type of listing. This will affect the circumstances in which the commission is payable to the agent.
Open listing
- You appoint the agent to sell the property but you may appoint other agents on similar terms, without penalty or extra commission.
- The agent is entitled to the agreed commission if the agent is the effective cause of sale.
- The agent is not entitled to the agreed commission if you sell the property yourself or another agent sells the property and the existing agent is not the effective cause of sale (i.e. Buyer did not contact the agent and did not attend open house inspections, etc.).
Sole agency
- If you appoint a new agent during the existing agent’s sole agreement term and that new agent sells the property, the existing agent is entitled to the agreed commission – so you may end up paying commission twice. The existing agent may also be entitled to damages for breach of contract.
- The agent is not entitled to the agreed commission if you sell the property yourself and the agent is not the effective cause of sale (i.e. Buyer did not contact the agent and did not attend open house inspections, etc.).
Exclusive agency
- If the property is sold during the term of appointment – the agent is entitled to the agreed commission regardless of whether the property is sold by the agent, another agent or you personally.
- If the property is sold after the term of appointment – the agent is entitled to the agreed commission if the agent is the effective cause of the sale.
If you have selected a sole or exclusive agency, you must advise if you agree to the appointment continuing as an open listing after the term ends.
PART 7 – COMMISSION
Check the commission amount (percentage of the purchase price or dollar amount).
Select when the commission is payable. Often ‘Other’ will be selected and reference will be made to Clause 5 of the Terms. Under Clause 5, the commission is payable where:
- The contract settles; or
- You default under the contract and the contract is terminated because of that default; or
- The contract does not settle due to a breach on the buyer’s end and you are entitled to the deposit; or
- The contract is terminated by mutual agreement between you and the buyer.
The agent will typically take their commission from the deposit they are holding in trust following settlement.
PART 8 – AUTHORISATION TO INCUR FEES, CHARGES AND EXPENSES
Check the expenses you have authorised the agent to incur in the performance of the services. Please note that some of these charges may be payable upfront or prior to settlement.
PART 9 – SIGNATURES
Once you have reviewed the Form 6, all parties should sign. The agent should not perform any work until the document is fully executed.
APPOINTMENT OF REAL ESTATE AGENT (RESIDENTIAL SALES)
Ensure all sections are completed accurately.
PROPERTY DETAILS AND DISCLOSURE
Ensure all sections are completed accurately.
The above information will be used to prepare the draft contract of sale. If these details are not correct, there may be errors with the contract that could give the Buyer a right to terminate.
