There are calls for an overhaul of the Real Estate Agents Act to protect consumers following revelations of an investor
on the day of settlement for huge profit.
However, the body which represents licensed realty agents is defending the industry and says sufficient checks are in place to root out misbehaviour.
Labour's housing spokesman Phil Twyford wants greater assurances that agents are operating by the book and providing accurate information to buyers and sellers.
"In these cases of quick turnaround, flipping, perhaps it should be mandatory for the Real Estate Agents Authority to investigate.
"It may be time to toughen up the legislation."
Twyford said the buying public needed reassurance about practices in the industry. He suggested looking at how Australia dealt with consumer protection in super-heated property markets.
His comments follow revelations in today's Herald that a family of seven's Papakura house was sold twice in one day for an additional $81,000.
Former owners Joanne and Nick Booth only learned of the rapid on-sale when the investor's law firm mistakenly sent a fax revealing the whirlwind transaction to their own solicitor.
Investor Hua Wu made $81,000 on the deal last May without ever taking possession of the five-bedroom house, CoreLogic records show.
He also made nearly $1 million last year on-selling a Mangere Bridge home, but says the profits were declared to IRD.
The REAA is now looking into the Papakura transaction, one of countless cases of investors cashing in on Auckland's bloated housing market.
However, Real Estate Institute chief executive Bindi Norwell defended the industry, saying there was a "robust legislative framework in place to minimise the risk of poor practices" by agents.
The Papakura case involved a private sale by an investor after he'd bought the property through a licensed agent - a common scenario for property flipping, she said.
Agents selling homes were legally required to disclose and get the vendor's written consent if they had any relationship with the buyer.
Agents must also provide sellers with a written appraisal supported by comparable sales data.
Norwell said just 1 per cent of the country's 15,000 licensed agents faced misconduct or unsatisfactory conduct findings last financial year.
"Real estate agents have a stringent education process to follow each year in order to keep their licence. In addition, REINZ has best practice guides that need to be adhered to as part of membership, all designed to minimise poor practices."
Joanne Booth said the extra money Wu made on their old Don St home would have made a "huge difference" to the couple and their five children.
"Another $80,000 would have been amazing. We would have no mortgage now at all."
The Booths bought the 1960s Papakura home in 2011 for $410,000 but decided to relocate to Levin last year to escape the big city and give their family a better life.
They listed the house with Tall Poppy Real Estate for $815,000. Wu signed a sale and purchase agreement for the quarter-acre, subdividable property a year ago on March 8 for $819,000. Settlement was to occur on May 24.
But just days out from settlement a group of Chinese turned up to inspect the property with Wu, accompanied by the Booths' agent, Newman Hoverd.
The Booths now believe the group were the new buyers.
A day before settlement, the Booths met their lawyer to sign paperwork.
He informed them he'd mistakenly been faxed a letter from Wu's solicitor revealing the property was being on-sold for $900,000 on settlement day to investors Su Feng and Feng Yu.
"He said he thought he should make us aware of this documentation he'd received," Joanne Booth said.
"That kind of put a dampener on everything. We were so pissed off. We've got five kids. That's money we could definitely have used."
Their property appeared on Trade Me for rent before settlement had even occurred.
Hoverd told the Herald he had nothing to do with the on-sale.
Wu, who had earlier indicated he planned to subdivide the property, found the buyers through his own networks and sold the house privately, Hoverd claimed.
He only learned the house was being re-sold when Wu brought the Chinese group through during a final inspection and it emerged they were new buyers.
"It was really odd. They hadn't actually even seen the property and they made a wild offer. They saw it from the outside but that was it."
The Booths' $819,000 sale price was "pretty good" and higher than they what they had marketed the property for.
"There was nothing in recent sales history anywhere in the neighbourhood that was indicating a price around that figure [$900,000]."
In an email last night, Wu denied having any prior relationship to the subsequent buyers.
He had planned to rent the property out but the purchasers made him a good offer so he decided to sell.
Wu said he had declared the $81,000 profit for tax purposes