The first place we should visit is the question of what is exactly is gazumping? The term gazumping is used as a way to describe an instance where a property seller accepts accepts an offer from another buyer, even if you’ve already started applying for your mortgage.
A lot of people may understandably ask the question; “Surely this isn’t legal? Especially if the seller has already accepted your offer to buy the property?”
Whilst yes, it is highly immoral and we do not condone the act ourselves, the unfortunate case is that it is not illegal and thus nothing can be done if that happens.
Gazumping happens all too often and for better or worse is a regular occurrence across the English & Welsh property markets.
The reason for this, is because until there have been written contracts exchanged by the lawyers, the agreement is not legally binding. Verbal agreements will not hold up in the court of law.
For first-time buyers in Coventry, being gazumped can be especially difficult and demoralising. You’re on your way to finally achieving your home owning dreams, when it all suddenly comes crashing down.
You may also find yourself caught up in a property chain that breaks, resulting in you having to push back your moving day. If you end up losing money because of this (perhaps you’ve already paid for non-refundable survey costs, conveyancing fees etc.), it can be even more frustrating.
As mentioned further up, until there has been a legal exchanging of contracts with your lawyers, any agreements made verbally won’t be legally binding. The seller is under no obligation to take the moral high ground and does not need to keep their word.
Between the point of having your offer accepted and exchanging deals, there can unfortunately be a good number of weeks. Whilst dedicated mortgage advisors in Coventry will aim to work as quick as they can, it’s not an instantaneous process and does take time.
The reason that the mortgage process can take as long as it does, is down to varying factors, such as having someone come out to do a property survey, arranging for a conveyancer to carry out the required searches and then also waiting to receive your mortgage offer.
Whilst you’re waiting for all this to go through, other first-time buyers in Coventry may come in and make the seller a better offer than what you had both previously agreed on, leading them to accept and leave you without a property to buy.
It’s difficult to pinpoint a specific cause of gazumping, as it varies per situation. Sometimes it’s financial preference, but it can also be anything from a buyer who’s process may be quicker, to someone who isn’t reliant on a property chain.
The term ‘gazumping’ is used as an umbrella term for any of these situations, wherein the seller takes up another offer after already verbally agreeing to yours.
There’s not a lot that can be done initially. A lot of the steps that might occur may not even become factors until you have decided to make an offer on the property.
Those steps, for reaffirmation of the points mentioned earlier, are having someone take out a property survey, finding a conveyancer to do searches, and the point where your mortgage is offered.
Even though you have limits as to what you can do to start with, you may still be able to quicken the pace between making an offer and exchanging your contracts. These are a few ways in which you can do this:
Additionally, there are a few other tips and tricks that may be quite useful to you and give you some additional security prior to the point of making contract exchanges with the seller.
First of all, make sure you ask the seller if they can possibly take the property down from the open market whilst you’re sorting out your mortgage, as this will lower the chance of someone else jumping in with an offer the seller can’t refuse.
The property owner is not obligated to agree to this request, though we generally find that many homeowners will agree to this request out of respect, especially if they’ve struggled in getting offers on the property in the first place.
Second of all, you should definitely look up your options for setting up a Lock-in-Agreement, as this means the seller has something to lose too as they will have to put down a deposit down as well.
If one of the party decides to pull out of the deal with one of these agreements in place, the other side will take their deposit. Sorting this out on the legal front can cost a pretty penny, but for that added security you may find it to be very beneficial.
Last of all, you may have the option of taking out insurance in order to protect yourself against being gazumped. These policies will be an agreement that in the event you are gazumped, you will receive a lump sum payout.