McHale & Co. Solicitors Blog

Gazumping Returns!

It’s not a word that we’ve heard for a while, but it is returning and we had an example of it here last week. After several tough years, the housing market is once again on the rise and the return of Gazumping was I guess inevitable.

So what is Gazumping? Well it’s simply when a buyer thinks they have agreed a deal to buy a house only for another buyer to step in and outbid them.

If a buyer is gazumped they can lose the money they had already committed to conveyancing fees or surveys etc. It is of little benefit to Estate Agents in reality, since they are typically on say 1% of the purchase price. The extra £100 generated on a £10,000 gazump would hardy turn their heads and most would much rather have in the commission quicker by sticking with the original buyer.

Unfortunately the Agents are obliged to pass on the new bid to their client who has the choice in the free market as to whether to accept it or not.  When Gazumping was commonplace in the past there were various calls to legislate against it.

While gazumping is legal in England and Wales, in Scotland it cannot be done.  Once an offer is made on a house and accepted in Scotland, it is legally binding.

There is clearly a downside for sellers if the same law were applied here. I can’t see it being on the legislative agenda in the foreseeable future so in the meantime we are where we are.

So a few tips:

  1. Sellers who get a higher offer after accepting an earlier one, beware! Many house sales fall through before completion for all sorts of reasons. A seller who allows a previous potential purchaser to be gazumped can be viewed with suspicion by anyone else looking to make an offer after that. Once it has known that you are prepared allow gazumping, be prepared to be “chipped” also. This is the practice where a buyer takes a seller all the way to exchange and then offers a lower amount at the last minute - a seller can be stuck if they are part of a chain and won’t be able to get a new buyer within the timescales required. It’s a bit hard to adopt the moral high ground on this behavior if you have “changed your mind” yourself earlier!
  2. Buyers: Have a mortgage application lined up and ready. This will speed up the sales process and prove they can afford the house
  3. Buyers: Instruct a Solicitor early and get the thing moving. Delay can be the reason sellers go back to agents and ask them to look for more buyers. Don’t give the seller an excuse to occupy the moral high ground!
  4. Buyers: Once an offer has been accepted, make sure the house is taken off the market for an agreed period –get this agreed with the agent
  5. Buyers: Make a fair offer in the first place! It’s hard to complain if you’ve tried to steal the property in the first place.
Categories: Conveyancing

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