Property expert David Leake of Housesetc addresses the issue of gazumping, and what buyers can do to safeguard themselves.
Gazumping occurs when a potential buyer is outbid by another party after their original offer has already been accepted. The practice is questionable, but unfortunately legal in both England and Wales. Regular involvement in gazumping will damage an agent’s reputation, so it is always in their best interest to prevent it. However, a buyer can take steps to avoid this situation by:
• Putting in a fair offer that is in line with the asking price, market and property conditions.
• Have their mortgage in place, and a conveyancing solicitor ready to instruct.
• Insist that the property is marked as ‘under offer’ or ‘sold subject to contract’ after the offer has been accepted, and the relevant paperwork has been received by the agent.
Either party can withdraw from a transaction at any time before the exchange of contracts. Common reasons for a seller doing this include receiving a higher bid (gazumping), deciding to hold on due to expected price rises, or simply getting cold feet. The buyer does not have any rights of recompense before exchange of contracts, but they can however appeal to the seller’s good nature to contribute towards any legal or mortgage-related fees incurred during the process.
A property sale is generally part of a chain that may be dependent upon linked transactions that can break at any time. However, a buyer can invest in home buyer’s protection insurance, and instruct a solicitor offering a ‘no sale no fee’ package to safeguard against financial risks. In 2016, Housesetc completed 92% of all agreed sales – we love selling houses!