Buying a New Home What Is Gazumping?
Buying a New Home What Is Gazumping & What You Need to Know
Buying a New Home, what Is Gazumping? So, you are about to purchase a property, carried out all the research, your verbal offer accepted by the agent and even worked on the mortgage arrangements. You’re not quite there yet, the seller could still accept a higher offer from another buyer. This is gazumping! We take a look at this and explain everything related to gazumping.
Legality of Gazumping
You find a property you like, you make an offer which the seller accepts. The seller then accepts a higher offer. It will undoubtedly feel ‘unfair’ but in England and Wales, gazumping is perfectly legal. The agreement for property buying or selling only actually becomes legally binding once you have exchanged the signed contracts. There is no binding contract until this time, so no party will be liable for any verbal agreement made.
It is common to have a period of time of several weeks between a verbal agreement between the buyer and seller of the property and the actual agreement being signed. This is due to various factors such as a property survey and a conveyancer running the required searches and receiving a mortgage offer. During this period the seller can accept another buyer’s offer. This usually happens for properties with higher demands which increases that property’s worth.
It is also possible that the seller chooses someone else’s offer, they could be keen to sell the property quickly and they may choose another offer due to, for example, if there are delays at the ‘purchasing’ side, such as with the mortgage application.
Avoid Being Gazumped When Buying a New Home
Clearly, there is no fool-proof method to not be gazumped. There are however insurance policies available, which will provide cover for any losses should gazumping take place. You can also ensure that you take steps to be prepared to lessen the probability of being gazumped.
While you may not be able to arrange everything beforehand, you can make provisions for surveys, find surveyors in advance and other related elements of purchase to be able to complete these steps quickly and look to complete the purchase a quickly as possible.
Arrange a ‘mortgage agreement in principle’, this is a conditional offer for you to receive a mortgage if certain conditions are met, do this before looking for properties. This helps to quicken the mortgage process at the later stage. Also, find a conveyancing solicitor ahead of time with to work with.
Ask the seller to take the property off the market as part of the offer. While a seller is not required to take the property off the market before any legal documents, it is helpful and many sellers will do so particularly in flat housing market areas.
Arrange a preliminary (also known as lock-in, lock-out, or exclusivity) agreement from the seller. The seller then can not engage in negotiations for the same property for a certain time period while you work on the mortgage and other property buying requirements.
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