37% of buyers are being gazumped and this figure has grown by 6% in the last two years, according to new data.
The HomeOwners Alliance is calling for an end to the practice of gazumping and recommends that buyers take out Home Buyers Protection Insurance to mitigate the financial loss. Recent research from MFS group highlights the risks of gazumping:
- 37% of homebuyers are now being gazumped – up from just over a third two years ago
- 78% of homebuyers want to see the practice made illegal
- 59% of buyers who were gazumped lost money
- The average cost of a property falling through is £2,400
Almost eight in ten homebuyers (78%) would like to see gazumping outlawed. The HomeOwners Alliance says that they consistently hear from customers who have had this happen to them. 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.”
5 responses
“I’m going to make this offer on the basis that if it is accepted you will stop marketing the property and it will be removed from every property website.”
As a seller, I want to receive the best possible price for my property. If someone else wants to pay me an extra £10,000, I’m going to take it. Perhaps the *HomeOwners* Alliance should be polling homeowners to find out what THEY want.
The problem with gazumping is at what point do properties come off the market?
When a formal offer is put in place should the property come off all of the websites and marketing material? A) From a sellers point of view they may not want that as it is subject to contract B) From a buyers point of view they will want that as they are spending money on solicitors, brokers, fees, searches and surveys.
If the process is 8 weeks in and you are ready to exchange but someone comes in with another £10k, does the seller ‘sack’ the buyer?
If you have a choice of continuing with an existing first time buyer or proceeding with someone who wants to gazump for a higher price but has a long chain, what do you do?
Has the agent done all of their due diligence and is the agent giving the correct advice to the seller i.e. does the agent just want their cut no matter what? Is the agent more interested in getting more money for their commission? Is the agent acting for the vendor? Is the vendor wanting more money no matter what? Is the vendor just wanting a quick sale no matter what? How will proceeding with a new buyer affect a vendor’s existing chain?
To be fair, my opinion is that the whole system is broken and is rather unfair on all individuals. There is no one right answer.
For me, if an offer has been put forward and an offer has been accepted, so long as all the due diligence is complete and above board, gazumping that is morally wrong and should be stopped. If the vendor is desperate for more money and wanted more than they got, my answer to that is that they should have held out and should not have accepted the innocent buyer’s offer in the first place. If there is a desperation to gazump, there should be an obligation to refund the innocent buyer all of their expenses.
Perhaps I am lucky or perhaps I am not party to conversations but I have not had one client complaining of gazumping or tell me they are benefiting from gazumping in a good 5 years. I’ve looked at these policies before for clients and I must confess that I and my clients realised that these are not particularly worth it. The cover seems somewhat restrictive in places.
Where are these “gazumping” figures starting from? As Anonymous says, solicitors rarely see this. If this is happening at offer stage via the estate agents then why are National Trading Standards not policing the estate agents? Oh wait, the Law Society want us to do it instead.