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'Gazumping' is back. Should this be illegal?


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I personally had never heard the word 'gazumping' before today, and I loved the sound of it. After seeing what it means, I'm not so fond of it...

'Gazumping' is the practice of a buyer swooping in after an offer has been accepted but before contracts are signed with a higher offer, and essentially swiping a property from the initial buyer.

Sounds quite sneaky to me, and while it's technically not illegal, it was the leading cause of deals not going through over the last 12 months according to new research.

Do you think making this practice illegal is a tad too extreme? Have you been the victim of it, or even the beneficiary of it?? Here's the news story with more stats; https://www.mortgageintroducer.com/comparethemarket-third-of-purchases-secured-by-gazumping/ 

 

Mark Rocks
Community Builder and Content Writer

www.propertyhub.net

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In the last 3 years I have been gazumped 5 times at considerable cost to myself with surveys. Even though I have had a gentlemans agreement with estate agents to take the property off the market after providing proof I had funds. There are a lot of estate agents actively encouraging this sort of trading. On 2 occasions there was no higher bid and they wanted to create a bidding war. The 3 houses in question are still up for sale as all trust has gone. So in the end their greed on these particular 3 has been very counter productive. I am now extending my own property and I'm glad I never fell prey to the unreasonable behaviour of seller and estate agents. It is about time the whole industry was regulated or we have a system like that in Scotland. 

 

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Yes, I think it is unfair to pull out after accepting an offer because there is a lot that goes on in the background for the buyer in preparation of the purchase and although it might seem like they have not lost money or anything and you are usually advised not to make any commitment until contracts have been exchange, it is not that straightforward. Up until offers has been accepted, it should be fair play to allow for bidding and it is the sellers choice to accept the highest bidder or whoever they prefer to sell to. However, once the offer has been accepted, I believe it is only fair to honour the agreement. 

This also should go both ways. I think the buyers also need to be made to put some form of deposit so that if for whatever reason, they cant make the mortgage, then that fund goes to the seller. It is unfair for a seller to wait on a buyer only to be told after many months that the deal has fallen through.

Some form of reform is needed to protect both buyers and sellers.

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I think making it illegal is a bit too far. The original purchaser shouldn’t commit to the transaction until the property is taken off the market (advertising). If the agent/seller continues to accept gazumping offers after agreements to take it off the market, they should have to pay the original purchaser a fee to go towards costs accumulated so far. £1,000 seems reasonable to me.

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On 7/3/2021 at 3:01 PM, andrew specs said:

I think making it illegal is a bit too far. The original purchaser shouldn’t commit to the transaction until the property is taken off the market (advertising). If the agent/seller continues to accept gazumping offers after agreements to take it off the market, they should have to pay the original purchaser a fee to go towards costs accumulated so far. £1,000 seems reasonable to me.

If not illegal it should be made very painful to the new buyer or agent who gains from the change, not the buyer who has been let down.  Full costs + 10% compensation fee paid to the losing buyer should reduce gazumping.  It doesn't matter whether the buyer or agent pays, or they share the cost, but gazumping won't be stopped unless made illegal, because if someone is willing to pay all the loser's costs + 10% to get the property - perhaps paying 30% over the asking price overall - it is hard to stop them.  Millionaires and billionaires are hard to stop unless illegal.  Gazumping IS illegal in Scotland I think.

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