It may soon cost more to sell your property, as real estate agents prepare to increase their commissions to compensate for additional compliance costs generated by the new defect disclosure laws governing real estate agents.

The average commission at present is about 3.95% of a property's sale price, plus a base fee of about $500, although some estate agents have already raised this fee to $750.

Before the recent law change, estate agents did not have to disclose a property's faults to a potential buyer. However, estate agents are now obliged to disclose all known defects. And the new legislation stipulates that, if it is likely, based on the estate agent's experience and knowledge, that the property has a defect, the agent has to make further enquiries in order to disclose the defect to a potential purchaser.

The estate agent must therefore either get confirmation from the seller that there is no such problem or they must make the purchaser aware if a house is at risk of being a leaky building, based on when it was built or what it is made of, irrespective of whether there actually is a defect or not.

Estate agents are going to have to try and persuade property sellers that it is now necessary to let the buyers know about all potential problems associated with the property.

There are some industry concerns that more sellers could opt to sell privately, through listings on Trade Me and other similar outlets, to get around the new defect disclosure rules for real estate agents. There is some public feeling too that a shake-up of Estate Agents is long overdue and the new legislation is just an initial step towards tightening up estate agent practices, encouraging more competition and allowing for much wider negotiable commission rates.

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