Brit Immigration

Houses for Sale property Gazumping

There’s lots of houses for sale and there’s a piece of property news today that is both bad and good if you have houses for sale. With so many houses for sale I only mention it because for the last six to eight months or so, all the news has been bad with prices falling and little or no help from banks.

A couple of houses for sale this week have involved the house buyers experiencing GAZUMPING. “What that?” I hear you say.

"Gazumping" is when a property owner refuses to formalise a property sale agreement at the last minute in order to accept a higher offer.

In the late 1980’s and early 1990’s, houses for sale and property prices were incredibly bouyant and gazumping became very common in England and Wales (not so in Scotland because they have a different buying system) because a buyer's offer is not legally binding even after acceptance of the offer by the vendor.

See more on this subject here Housing Property in UK

When an owner accepts the buyers offer on houses for sale for a property, the buyer will usually not yet have commissioned any building survey or had his solicitor perform any of the recommended legal checks. So the offer to purchase the property is made "subject to contract".

Until written contracts are exchanged either party can pull out at any time.

As it may take up to 12 weeks for all the formalities to be completed, the vendor, or their agent, may receive another – higher – offer.

I have written more here on the subject of Banking Money Finance in UK.

or see my other blog relating to Money Finance and Credit

Although it is frowned upon, the estate agent has a legal duty to pass on all offers to their client and don’t forget that the higher the selling price, the more commission the agent makes. So the seller may be tempted, by greed, to accept the higher offer – even if it is a few minutes before the contracts are exchanged. This can leave the buyer in the predicament of having to better the new offer if he still wants the property or lose it. Back in the 80’s – 90’s this trick was frequently used by sellers to get a better offer from the buyer by introducing a fictitious new buyer at the last moment to get a better price.

Gazumping can have several effects … after the buyer has called the seller a few choice names.

There is a financial impact – if you up your offer, you pay more. If you don’t, then the money that you have already paid out for legal expenses and surveys will leave you out of pocket when you don’t get the property.

There can be a logistical impact – you may have already sold your old house or given your current landlord notice. You may end up with nowhere to live.

There is an emotional impact – that feeling that you have been “taken for a ride” or worse (…………………) insert your own bad words here!!

so what’s the good news …… well if people are being gazumped on houses for sale … is it a reflection that the housing market is just beginning to pick up ever so slightly?

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David