Property finders likely to cause a few headaches for REAA

The REAA comes into effect today and is the body established to regulate real estate agents.

A property buyer's agent will need to be licensed under the new code of conduct and regulatory requirements enforced by the REAA, but there could be some wiggle room for those people who define themselves as property finders or home finders, according to Graham Crews, real estate consultant at BDH Solutions.

Crews said property finders who entered into a memorandum of understanding with a property owner and then on-sold the property might not have to be licensed as they are essentially acting as a private seller. However, if they accept a fee from a third party to do so, then they are probably entering territory covered by the legislation, and would require a licence.

"If you're taking payment from a third party, then that's an issue," he said. "The Real Estate Agents Authority's legal team are going to know that, and they will probably investigate."

He expects real estate agents will have to report property finders they consider may be acting unlawfully without a licence to the REAA under the new code of conduct.

The issue that may confuse some people in New Zealand is that the legislation is more encompassing than similar regimes overseas, he said.

In guidelines released on the REAA website, buyer's agents will have to be licensed, and this includes people who may class themselves as property finders.

Crews said there is an issue around the definitions of the terms, with some agents calling their assistants ‘buyer's agents', when they clearly are not according to the legal definition.

Property managers, auctioneers, lawyers and conveyancing practitioners are exempt from the act.

The REAA takes up its role as the industry regulator today after policy-makers overhauled the real estate sector last year, stripping the Real Estate Institute of its regulatory function and handing over a beefed up regime to an independent body.