First of all, what is gazumping? It is actually a term that is used to describe circumstances wherein the seller of the property you’re looking to buy, accepts an offer from someone else, even if your mortgage application is already underway.
You may, like many others, think to yourself “this can’t be legal surely, especially if they’ve already accepted your offer”. This is something that whilst completely immoral, unfortunately isn’t an illegal practice.
Gazumping happens all the time and for better or worse is a recurring part of the property-buying process in England and Wales. This is because an agreement to buy or sell a property doesn’t become legally binding.
Until the lawyers exchange written contracts. Until that point, you only have a verbal agreement.
Gazumping can be a very traumatic experience for first-time buyers in Sunderland. You may think you are about to purchase the property of your dreams when the sale comes hurtling down.
You may also be part of a chain that breaks and, as a result, you have to move your moving date back. It can be much more painful if you lose money as a result.
The reason for this is that you can sometimes be left out of pocket by non-refundable survey costs, conveyancing fees, and mortgage arrangement fees.
As we have previously touched upon, until any contracts have been exchanged, any agreements made verbally are not legally binding, they are under no obligation to “follow their word”.
Unfortunately there can be a good few weeks difference between the point in which you have an offer accepted, and the point where deals are exchanged between the two parties.
The reason for it taking so long can be due to a few different factors, such as having a property survey undertaken, your conveyancer carrying out the necessary searches and waiting to receive your mortgage offer.
During this period, other first time buyers in Sunderland may come in and make a much better offer than the one you had previously had verbally agreed. This offer will be passed on from the estate agent to the seller of the property.
It may not always financially that these offers are preferable, as sometimes the buyer jumping in may be able to get through their process quicker or be free of the burden of a property chain.
The term ‘gazumping’ covers any of these preferable offers the seller decides to accept over the offer you initially made.
Unfortunately there’s not really a lot that you can change at the start. Various steps won’t occur until you have decided to make an offer.
These steps include having the property survey undertaken, conveyancer searches, and your mortgage being offered offer.
Even though you are limited in those regards, you may still be able to decrease the time between making an offer and the exchange of contracts. Here are some of the ways you can do this:
Additionally, here are some other tips and tricks that could potentially help you out and give you some additional security before the point of exchanging contracts with the seller.
First of all, make sure that you ask the seller to take the property you’re looking to buy off the market, as this will lower the chance of someone else seeing in and swooping in with an irresistible offer.
The property owner has no obligation to agree to this, though it is commonplace for many homeowners to agree to this request out of respect, especially if they’ve struggled getting offers on their property as well.
Second of all, you should definitely research your options for putting in place a Lock-in-Agreement that will see the seller put up a small deposit of their own, so that they have something to lose from taking another offer.
In this instance, if one side backs out of the deal altogether, the other side will take their deposit. Sorting this out can be a little costly on the legal front, but for that added security may well be worth it.
Finally, you may have the potential option to take out insurance in order to protect yourself against the act of gazumping. These policies agree that you will get a lump sum pay out in the event of you being gazumped.