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Agents were previously only at risk of paying compensation when committing serious cases of "misconduct" that directly caused buyers or sellers to lose money.
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But the new law brought in today allows buyers and sellers to also seek compensation in less serious cases of "unsatisfactory conduct" by an agent.
Kevin Lampen-Smith - chief executive of industry regulators the Real Estate Authority - said there had been cases where buyers and sellers lost money due to unsatisfactory agent conduct and the new law closed that gap.
"The whole purpose of the Act was to lift professionalism in the industry but also provide a process by which the public could seek redress for the losses they have occurred," he said.
But while the new law fills a gap for consumers, it wasn't likely to open a floodgate of compensation payouts.
Over the past decade, agents committing misconduct had only ever been ordered to pay compensation in 10 cases.
"Compensation isn't easy to get," Lampen-Smith said.
"People have to be able to prove the loss was suffered because of the behaviour of the real estate agent.
Those seeking compensation would be more likely to be successful when proving a very specific complaint.
"If an agent says a property is okay and the person goes and had to spend $20,000 fixing it up - that might not be as successful as saying, 'I specifically asked about the roof and the real estate agent specifically said the roof is repaired and in perfect condition, but I had to spend $20,000 fixing it'," Lampen-Smith said.
Those seeking compensation from an agent would begin by lodging a complaint with the Real Estate Authority's Complaints Assessment Committee.
Cases likely to lead to compensation would then be transferred to the Real Estate Agents Disciplinary tribunal for a ruling.
It is possible then for either party to appeal to the High Court. Other cases involving property deals can also go directly to the courts and there are no limits on the amount of compensation sought in these cases.
However, overall, Lampen-Smith said the behaviour of real estate agents had been on the improve since the REA came into existence as regulator about 10 years ago.
Despite there being about 90,000 residential property sales typically made each year, there were only six cases of misconduct last year, he said.
"This year, we've got the lowest ever number of complaints at 296, it used to be up to around 700 in about 2013/14," he said.
Bindi Norwell - Real Estate Institute chief executive - said her lobby group was committed to raising the professional standards of agents.
"We have made great inroads alongside the Real Estate Authority towards achieving a more skilled and proficient real estate industry," she said.
"The number of complaints against agents has reduced year on year since 2013 and confidence in the real estate industry has improved."