In the face of gloomy predictions from the Government about the state of the property market, what is clear is that the demand for property is greater than ever. In the south-east, that means if you’re a buyer, you face fierce competition.
Recent research by Market Financial Solutions (MFS) found that on average, 5% of buyers across the UK have been gazumped. That’s a whopping 1.5 million buyers with the figures, much, much higher in London. The costs of being gazumped are also high. There’s the stress and distress of losing out on the home that you loved as well as the potential to lose thousands of pounds in unrecoverable fees.
The practice of gazumping is not illegal. Even after your offer is accepted, and until contracts are exchanged, in theory, there is nothing to stop a seller accepting a higher offer. Even if you’ve spent money on surveyors and / or on solicitor’s fees.
As spring approaches and the property market bursts back into full swing, if you’re looking to buy, now is the time to take all possible steps to protect yourself against the possibility of the dreaded gazump!
- Get your finances in order
Cash buyers or buyers who have already sold their own property are always an attractive prospect to sellers. Get your current property on the market well in advance of your search and if possible, make sure you have your finance in place. If you’re getting a mortgage, try and arrange to have an offer in principle.
Funding a deposit is also often a challenge but there are various Government initiatives available including the Help to Buy ISA*. Whilst it may mean a delay in your purchase, having funds puts you in a stronger position.
- Insist it’s taken off the market
When your offer is accepted insist the property is taken off the market and monitor what happens. If the property listing remains as it is (not marked sold or at least as under offer) that could be an indication that all is not well, as is a seller who refuses to take it off the market. Forewarned is forearmed.
- Keep in touch
Once your offer has been accepted it’s important to keep the sale progressing as quickly as possible. That may mean keeping in touch and chasing your solicitor if necessary. But it is also important to build a rapport with your estate agent. You want to both keep your estate agent in the loop and be kept in the loop, and a good estate agent will not condone the practice of gazumping.
Should the worse still happen and you are gazumped, the relationship with your estate agent could stand you in good stead. Not least if the gazumper’s purchase falls through, you may still be in with a chance.
- Consider protection
Ask your solicitor or estate agent about the possibility of insurance against gazumping or a lock-in agreement. A lock-in agreement normally requires a payment of a deposit and prevents the seller negotiating elsewhere for a set period of time. If they do, they forfeit their deposit which might not save you heartache but should cover any wasted fees.
*If you are saving for a deposit for your first home, and are eligible for a Help to Buy ISA, the Government will boost your savings by 25%. So, for every £200 you save, you receive a government bonus of £50. The maximum government bonus you can receive is £3,000.
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