As a First Time Buyer in Derby, you may have little to no knowledge about gazumping. In the circumstance where you have purchased a property, carried out all the research, had a verbal offer accepted by the agent and even worked on the mortgage arrangements. You are ready to begin a fresh start in your dream home.
Then all of a sudden, the seller contacts you to say they have accepted a higher offer from another buyer meaning you are out of the deal. This is known as gazumping, which we will be talking about in this article today.
Despite this action being seen as immoral, gazumping is legal in England and Wales. As soon as the signed contracts have been exchanged, this is when it becomes a legally binding contract. Therefore, anything that happens prior including verbal agreements is absolutely fine and legal to do.
It can take several weeks for a verbal agreement between the buyer and seller of the property and the actual signed agreement. This is because there can be many hold-ups for things like a property survey and a conveyance running the required searches and receiving a mortgage offer. Within this time frame, the seller can accept another buyer’s offer. This can be common for properties with a lot of interest like the mortgage application.
In some cases, the seller could choose someone else’s offer. This could be because they are keen to sell the property quickly so may choose another offer because of delays on the ‘purchasing; side like the mortgage application.
Obviously, there is no straightforward method to not being gazumped, however, being prepared and following the best steps will reduce your chance of being gazumped.
Even though you won’t be able to arrange everything beforehand, you can make arrangements for surveys by looking for a surveyor in advance and other related factors that go towards the purchase. You can complete these steps swiftly and look to complete the purchase as quickly as possible.
Obtain an ‘Mortgage Agreement in Principle’. This is a conditional offer to get a mortgage if particular conditions are met and should be done prior to looking for properties. By doing this, you can quicken the mortgage process at a later stage. Furthermore, finding a conveyancing solicitor ahead of time to work with.
It could be possible to ask the seller to take the property off the market as part of the offer. The seller taking the property off the market before any legal documents are not required, it is helpful and is something a lot of sellers will do especially if the housing market is ‘flat’. It’s also key to keep the seller up to date in terms of your progress regarding the house purchase, searches, and mortgage arrangements. This is a brilliant way to build a relationship with the seller which can provide them with a confidence boost in the sale process.
There is the option to organise a preliminary (also known as lock-in, lock-out or exclusivity) agreement from the seller. From this, the seller is then obliged to not get involved in negotiations for the same property for a particular time period while you work on a mortgage additional property buying requirements.
Something you may want to keep in mind is the fact that there are some insurance policies in place to cover any losses if gazumping takes place. If the sale falls through because the seller has decided to accept an offer from another person, you will be able to claim back any expenditure like conveyancing fees, survey fees and any other costs you have needed to payout. This is usually around £50 and is valid for 120 days.