It is the second time Lee's Propertywise Ltd has been forced to back out of a deal amid allegations he'd taken advantage of vulnerable vendors.
A second Commerce Commission complaint is now being prepared and Lee is also being referred to the Companies Office for investigation.
He denies acting unethically or outside the law.
Baucke sold her three-bedroom Massey property privately to Lee in May for $515,000 after she answered an online advertisement promising a free assessment and "fair offer".
The former social worker suffers from a traumatic brain injury and short-term memory loss following a car accident in 1983 which left her in a coma for nine weeks.
Lee claimed to have obtained a registered valuation for the property of $580,000. Estimates viewed by the Weekend Herald put its actual worth at between $630,000 and $770,000.
Baucke signed a sale and purchase agreement without receiving independent advice from her family or lawyer.
When her solicitors, Bay Law Office, learned of the sale they immediately tried to cancel the contract and referred the matter to the Commerce Commission and Real Estate Agents Authority.
Lee refused to back down, maintaining that settlement would occur "as scheduled" on July 25.
However, after reading about Baucke's plight, top law firm MinterEllisonRuddWatts offered to take up her case for free.
Partner Zane Kennedy wrote to Lee on July 14 asserting that the contract was "unenforceable" and that Lee's other company PWG Ltd, the actual purchaser of Baucke's home, had secured an "unconscionable bargain".
Kennedy also accused Lee of misrepresenting the sale price as "fair", and of misleading or deceptive conduct under the Fair Trading Act.
"Consequently, Ms Baucke is not required to abide by the terms of the Agreement and, to the extent necessary, it is hereby cancelled."
In a statement, Lee - who initially demanded that Baucke sign a confidentiality agreement - said he stood by the sale price and maintained that his actions were fair and legal.
However, he had agreed to cancel the contract.
"Given the value of the property, litigation fees and delays, it's just not worth it."
In future, his company would add a one-week "cooling off" cancellation clause to all sale contracts as a solution to "seller's remorse".
"We are not in the business of forcing people to sell their houses.
"PWG Limited customers enjoy the benefit of a quick clean sale and don't pay marketing or commission fees."
Lee has refused to provide a copy of his registered valuation or confirm who prepared it.
But he said the sale price was "reasonable given that a quick sale was sought, in a declining market".
The case follows that of cancer sufferer Sarah Ewe, who sold her house to Lee without receiving legal advice when he called at her Mangere property with a basket of food in November.
Lee backed down in May after angry family members of the widowed great-grandmother brought in lawyers, accusing him of preying on a vulnerable, sick pensioner.
The two cases have sparked calls for authorities to crack down on 'no fees' house buying companies, which operate largely free from regulation and don't use licensed agents.
Labour's consumer affairs spokesman Michael Wood has called on enforcement agencies to shut companies like Lee's down and requested a Parliamentary inquiry into predatory practices across the investment property market.
Baucke's legal executive at Bay Law, Donna Kitchener, thanked the Weekend Herald and everyone that had supported Baucke.
"I am extremely relieved that she has not been forced to sell her home and move out of Auckland. It was a very stressful time for Pamela.
"We couldn't have hoped for a better outcome. We are very grateful."
