Why do some estate agents allow gazumping?
PUBLISHED: 08:00 23 March 2015 | UPDATED: 10:30 23 March 2015
Simon Gerrard, the president of the National Association of Estate Agents, answers your property questions.
My friend has just been gazumped - why do estate agents do this?
First and foremost it is important for the property buying public to understand that the practice of gazumping is not actually one that is encouraged by reputable agents.
There really is very little benefit for an estate agent in promoting this course of action (unless it is a significant increase that would benefit their client) as the facts of the matter are that an estate agent only earn a fee once on each sale, and since they are being paid between 1 and 2 per cent of the sale price, a vendor selling for say £20,000 more will only earn the estate agency between £200 - £400 and the negotiator generally between £20 - £40 extra.
In the UK (apart from Scotland) when you have agreed a sale, either party can withdraw from the sale or alter the price at any time up until exchange of contracts. This threat means that a vendor will often want their property to stay on the market until the potential buyers have had their survey, mortgage valuation and in some cases a mortgage offer before taking their property off the market.
It should also be remembered that an estate agent is legally obliged to pass on “all and any offers” to a vendor, no matter when they are made, so if you are gazumped this will be the vendor’s decision not the agent’s.
While buyers outnumber sellers and the market continues to move at a pace, the risk of gazumping still remains, however, as a buyer there are steps you can take to minimise the chance of being gazumped.
The most important is to act quickly. The Mortgage Market Review has meant delays can occur when applying for finance so ensure you have your mortgage in principle before you start your search.
Next, keep in regular contact with the agent you are buying through, so that they can feel confident that there will be minimal delays with your purchase. Keep the pressure on your solicitor to keep the transaction moving,
If the agent and therefore the vendor can see that you are making progress, getting the survey done, searches etc, then the vendor is less likely to entertain other buyers and starting the process over again.
If you value what this story gives you, please consider supporting the Ham&High. Click the link in the orange box above for details.