The process of buying or selling a house can be riddled with stresses, pitfalls and potential for disappointments. Amongst all the issues I face within estate agency, gazumping is certainly one of my least favourite.
The process of gazumping exists when a seller accepts an offer from a potential buyer, but then following acceptance of this offer, accepts a higher offer from an alternative buyer. This situation inevitably causes a great deal of upset, but despite the moral issues often raised, unfortunately the whole process is perfectly legal.
As estate agents, we are duty bound to act in the best interest of our client, the seller. In plain English, this means we have to seek a buyer who will offer and proceed on a sale with the highest possible bid. Our responsibility to do so continues until exchange of contracts and we HAVE to forward EACH & EVERY offer to the vendor, until contracts are exchanged.
Now I am pleased to say that in most cases the vendor will take the view that they have accepted an offer and therefore they are not prepared to renege on their agreement –however it always amazes me that when a ‘gazump’ occurs, it is always the agent who seems to get the blame!
I am aware that some people feel estate agents are self serving, self centred, ruthless sharks who would relish in any opportunity to pull a back door deal; but in this instance although I totally empathise with the buyers disappointments, I feel more empathy with the agent. We are not only legally obliged to continue to forward all offers until exchange, but we then have to sort out the resulting turmoil!
The problem exists simply because neither the buyer nor the sellers are legally bound into an agreement until they exchange contracts. Therefore either party can withdraw from the sale at any stage, without redress. For the buyer, it can mean a loss of money depending on how advanced the sale is. There are however ways of reducing the chances of being gazumped, which include:
- Negotiate a pre-contract deposit agreement, guaranteeing a no-gazumping policy
- Process your purchase through solicitors as fast as you can
- Take out insurance to cover you against such an event
