The $65 billion residential real estate industry is expected to bow to Government pressure and agree to the appointment of an independent consumer watchdog.
Associate Justice Minister Clayton Cosgrove has threatened to sort out the industry if it does not reform itself.
His threat was prompted by thecase of a Napier agent who tried to get a woman to accept just $230,000 for two townhouses when she wanted $400,000.
The new watchdog, which would bring real estate into line with the likes of the telecommunications and electricity industries, would enable house buyers and sellers who had bad experiences with agents to have their complaints heard.
A formal proposal will be put to the Government next month.
The real estate industry sells about 200,000 houses a year at an average price of $325,000 each.
The organisation representing New Zealand's 17,500 real estate agents will tell the Government it wants an independent arbitrator appointed to review real estate complaints and disputes.
Real Estate Institute president Murray Cleland said executives would meet Mr Cosgrove on December 14 to present proposals for industry reform.
This is in response to Mr Cosgrove's calls for the institute to draft proposals to make disciplining agents more robust and transparent.
The institute wants the Government to appoint an ombudsman to review cases of charges against agents. These are now heard only by fellow agents, which Australian real estate ethics crusader Neil Jenman has likened to handing law and order over to the Mafia.
Mr Cosgrove said last month that he had demanded that the institute consider establishing a position similar to the Banking Ombudsman to hear complaints and take action when agents broke the law.
Mr Cleland said the institute would not only seek a new watchdog but would press for more complaints to go to the Real Estate Agents Licensing Board - a move that Mr Cosgrove said made more sense than the institute's initial proposal to amend laws and increase fines from their present maximum of $750 to $30,000.
The minister has said agents handling million-dollar deals would not be discouraged from breaking the law by a $30,000 fine.
Instead, he wants complaints to go to the board, which has the power to take the strongest action by banning agents from the industry.
