There is widespread dissatisfaction with estate agents, a report by the Office of Fair Trading has concluded.
The OFT stops short of recommending licensing for the sector
Sellers commonly complain that estate agents do not do enough work to justify their fee or cause sales to be delayed.
Buyers' gripes centre on misleading property descriptions or the failure to pass on offers to the seller.
In its report, the OFT warns estate agents that they could be forced to join a compulsory code of conduct if they do not improve their standards.
The OFT also recommends changes to the Estate Agents Act.
It says this is necessary to protect consumers and drive out those "unfit to practice" and to "combat bad conduct".
More competition over fees is also needed, the report concludes.
The OFT said fees often appeared fixed, and there was more scope for competition on price.
At present, there is widespread use of fixed "pricing points", with the majority of fees being set at a quarter-point increments between 1% and 2%.
The OFT recommends estate agents should be required to maintain written records of offers to ensure that all offers are being passed on.
The Consumers' Association criticised the report's findings, saying it fell "woefully short" of what was needed to protect consumers in what was for many people their biggest financial decision.
Emma Harrison, senior public affairs adviser, said: "After two years of investigation we expected the OFT's recommendations to be stronger. Not only has this done little to ensure adequate levels of consumer protection but has also left the industry open to rogue traders."
The report is the result of a 21-month inquiry into the way estate agents treat home buyers and sellers in England and Wales.
The study was launched by the OFT after a rise in complaints from consumers about the service they received from agents.
The OFT report shies away from imposing a compulsory licensing regime. Instead it favours "better and more widespread self-regulation".
Sellers should shop around and negotiate fees
Estate agents should provide fees quoted both in percentages and in real money
OFT to launch a consumer information campaign to raise awareness of shopping around and negotiating fees
Estate agents should be required to maintain written records of offers
Enforcement agencies should be given more powers
It must be made clear that the Act covers new ways of buying and selling
Estate agency contracts must be clearer and written in plain English
While there are a number of codes governing the work of estate agents there is only one - the code of the Ombudsman for Estate Agents - that has been approved by the OFT.
It covers only 36% of estate agents.
"If voluntary codes of practice do not achieve the desired results the case for a statutory scheme should be considered," the OFT warned.
The National Association of Estate Agents (NAEA) said it was disappointed by the approach taken by the OFT.
Peter Bolton King, chief executive, said: "We believe the OFT should have listened to us and taken their recommendations further with the introduction of minimum qualifications and self regulatory licensing."
More than nine out of 10 people buying and selling a home in England and Wales use an estate agent.
In the course of its investigations, the OFT interviewed 1,000 buyers and 1,000 sellers, and about 500 estate agency offices responded to a questionnaire.
It found a quarter of recent sellers said they were dissatisfied with the service they received from their estate agent, citing poor value for money, delays in the sale and inadequate communication.
The report also identifies serious complaints about agents failing to declare a personal interest, passing on offers and suggestions that buyers would be more successful if they bought financial services tied to their agent.
John Vickers, OFT chairman, said: "There is widespread public dissatisfaction about the market for estate agency services. Necessary change includes sharper price competition, more effective regulation and higher industry standards."
The year before the inquiry was launched, 5,500 complaints were made to the Ombudsman for Estate Agents, an increase of 25% on the previous year.
An additional 5,000 complaints were made to trading standards offices, mostly about selling techniques.