Tips on how consumers can protect their pockets from gazumping have been issued after it emerged more than a third of buyers had been stung by the practice.
Gazumping is where a buyer has the offer on a home accepted but the seller subsequently agrees to a higher offer from another party. The original buyer loses the home and is therefore ‘gazumped’.
Now new research from the HomeOwners Alliance shows 37% of buyers have had a home purchase wrecked due to the practice – a figure which has grown by 6% in the last year.
Gazumping is legal, therefore there is little buyers can do to avoid falling victim. However, there are things buyers can do to protect their finances from being hit by gazumping.
For on top of the emotional side of losing a property, many would-be buyers may have already invested cash into the purchase. For example, they may have paid for surveys, searches and conveyancing fees not to mention mortgage costs.
Paula Higgins, CEO of HomeOwners Alliance, said: “The system fails consumers by enabling gazumping.
“If you take a look at property websites you will see many properties listed as sold subject to contract (sold STC), almost inviting other potential buyers to try their luck with an offer. And estate agents are legally obliged to pass those offers on to the seller.
“Unfortunately, at the moment, gazumping is still legal and sadly there’s not much you can do about it. That’s why we’re trying to raise awareness to consumers so they can at least protect their pockets from this unethical practice.
“We urge them to be prepared, move quickly, get home buyers protection insurance and where possible ‘lock in’ the seller.”
Here’s what the HomeOwners Alliance suggests buyers can do to protect themselves from being gazumped.
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Get insured
Higgins explained, while you cannot prevent the seller accepting another offer, you can mitigate the financial loss.
“Home buyers protection insurance starts at £69,” she said, “has no excess to pay and can help recover your costs if your transaction does fall through including gazumping.”
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Be prepared
Be ready to move quickly. This includes having putting your mortgage Agreement in Principle in place, appointing your solicitor plus preparing all necessary documentation.
“Any unnecessary delay adds the risk that another buyer could come along and make a better offer,” warns Higgins.
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Move quickly
“You want to get to the point of exchanging contracts as quickly as possible,” said Higgins, “because at that point the transaction is legally binding.
“So keep the pressure on, be responsive and do all you can to keep the process moving.”
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Ask for the property to be taken off the market
Sellers are not always keen to do this, but it’s worth asking them to take the property off the market once your offer has been accepted. If the property is no longer being advertised, there’s much less chance of a higher offer being made and you being gazumped.
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Ask for a ‘lock out’ agreement
A lock out agreement is essentially a contract between the seller and the buyer stating that the buyer has the exclusive right to buy the property within a certain period of time. The HomeOwner’s Alliance has published a guide which has more information on lockout agreements.
