$10,000 commission - no deal

Kate Holgate and son Jack in front of a house she tried to buy in a 'part exchange' deal with her own house in Torbay. Photo / Paul Estcourt

A North Shore house-hunter who lost money on a failed deal wants to warn others to avoid her fate.

Kate Holgate and her partner signed a contract to pay cash and swap their Torbay house for a more expensive Long Bay house. Classic Real Estate, trading as The Professionals Mairangi Bay, got $31,000 commission of which Holgate paid $10,000.

But the deal soured after the bank refused to discharge the mortgage on the Long Bay house and no transaction was completed.

Holgate said the situation was unfair because she was left out-of-pocket, with no new house and with no one to complain to.

After mid-November, property deals gone sour will go before the Government's new real estate agents authority which aims to bring independence, transparency and more power to consumers.

The new Real Estate Agents Act 2008 removes many functions that the Real Estate Institute fulfils, overhauls the complaints system and axes the old law passed 32 years ago.

Holgate said she had nowhere to turn apart from private litigation, more expensive than the $10,000 she has lost.

"The crux of the issue - and very relevant to others in the current market - is that the agents deducted their commission before settlement took place. They also got commission of approximately $21,000 from the other vendor with whom we were trading houses. We were also paying him a cash difference as his house was more valuable so it was not a straight swap.

"The agents have not wanted to know about our plight and we have had no apology or explanation from them as to why they feel they are entitled to keep our money," she said.

Havard Daniels, licensee of The Professionals Mairangi Bay which has since shut, said he talked to the agents involved in the deal but could do nothing to help.

"It appears that Classic Real Estate and [the agents] have acted correctly. The decision to cancel the contract was out of our control and made by yourselves," Daniels told Holgate.

"I can find no information that would indicate we have acted other than in the best interests of all parties to the transaction," he said, citing the reasons behind the deal failing to proceed.

The vendor of the Long Bay house was helpless after the move by the bank "pulling the rug from underneath" him, Daniels said.

It was Holgate's call not to take action against that vendor.

NEW BROOM

Real estate rules from November:
* Real Estate Agents Act 2008 comes into force.
* Axes Real Estate Institute's regulatory role.
* Brings in new Real Estate Agents Authority.
* Compensation of up to $100,000 possible.
* Now, the maximum fine for agents is just $750.