In London, we’re nearly back to the peak of house prices that we saw back at the height of the market in 2007. With demand outstripping supply at every end of the market there are not enough properties to sell. On top of that, increasing demand from initiatives such as the Government’s Help to Buy Scheme has added fuel to the fire.
That means one thing – not only is competitive bidding back on the scene but so is the dreaded gazump. “The gazump” may sound like an evil character in a Dr Seuss book, but it is actually a bit of jargon thrown around by property pundits.
A: In England and Wales a buyer’s offer is not legally binding even after acceptance of the offer by the seller which means that a seller is within their rights to accept another higher offer even after the sales process has been begun by the first buyer – this practice is known as ‘gazumping’.
When the seller of a property accepts an offer on a property, the buyer will then arrange for a survey and will instruct their conveyancing solicitor. The offer to purchase is made “subject to contract” and thus, until written contracts are exchanged either party can pull out at any time. It can take as long as 10-12 weeks for the exchange of contracts to be completed. (the national average for exchanging contracts is 92 days, whereas Northfields average is 52 days). If the seller is tempted by a higher offer during this period it leaves the buyer not only disappointed but causes them to lose the money that they have spent on their survey and solicitor.
If you are not familiar with the law, it may seem like estate agents are the enemy in this case. However, estate agents are contractually obliged to put up any offer to the seller and it is then the seller’s decision whether or not to accept the second offer and therefore ‘gazump’ the first buyer.
At Northfields we don’t generally continue to schedule viewings on a property after an offer has been accepted unless otherwise advised by the seller.
In some cases, such as when a corporation is selling a property, estate agents are required to not only continue to show the property to prospective buyers but to also to publish a public notice publishing the offer price and inviting higher offers. In cases like these where a corporation is selling property, there are bargains to be had, but gazumping is a greater risk.
When the property market is very buoyant as it is currently, gazumping is common. When the property market is slower, the practice of gazumping becomes rare.
The term gazundering has been coined for the opposite practice whereby the buyer waits until everybody is poised to exchange contracts before lowering the offer on the property, threatening the collapse of a whole chain of house sales waiting for the deal to go through.
When you put up your offer, ask if it is possible for the property to be taken off the market once the survey is booked. Be aware that if you are buying a property that is being sold by a corporate client they will actively look for higher offers and you will simply have to take the risk of being gazumped.
Choose a reputable, no sale, no fee solicitor
You can minimise the risks of being gazumped by ensuring that your solicitor works on a no sale, no fee basis, so that if the sale falls through you do not lose the fees. It also helps to ensure that your solicitor offers high quality service and will act quickly. If you need a recommendation for a reliable conveyancing solicitor, call Northfields on 020 8740 6622 and we’d be happy to use our 27 years of experience to recommend a reputable solicitor.
Choose an estate agent with a dedicated sales progression team
It is also extremely helpful if you choose to use an estate agent that has a dedicated sales progressor or sales progressio team. It is a sales progressor’s job to chase solicitors to ensure that the sale goes through to completion. You have a greater chance of the sale progressing smoothly when you have sales progressor whose sole job is to ensure the smooth running of the transaction. At Northfields our dedicated sale progressor has years of experience.
You can ask us your questions anytime, anywhere via Twitter @Northfieldslive. You can even tweet our Managing Director directly @nickdevonport. Or ask us questions via our Facebook page. You can even do it the old fashioned way and give us a call on 020 8740 6622.
However you’d like to speak to us, we’re here for you.