Buying a house is difficult enough without ‘gazumping’. Research shows that 31% of UK homeowners have been a victim of gazumping in the last ten years. Sadly losing out on a desired property.
Luckily for those north of the border, Gazumping is not as common in Scotland. Most of those affected are located in England and Wales. However, first we must explain the property jargon.
What is Gazumping?
Gazumping is when a seller accepts a buyer’s offer to purchase, and while the first offer is still agreed, they then accept a new offer from another seller.
Whilst not illegal, gazumping is certainly seen as “shady” in practice. It can, understandably, be frustrating for any property buyer. The original buyer may have sold their home. Thety may have a set move-out date from their own property sale or their rental. Only to find out that their new home has been bought by someone else. Their only option is to try and bid more money than their original offer. Or to pull out of the purchase entirely. As contracts are sometimes exchanged late in the process of buying a home, many buyers may have incurred costs already such as paying for their own property survey for the mortgage valuation or a specialist roof survey. As well as legal conveyancing costs. Gazumping not only affects the buyer, but it could also affect the buyer of their home and so on, causing an unpleasant domino effect.
Does Gazumping happen in Scotland?
Unfortunately, yes. However, instances are far less common than in England and Wales.
In Scotland, offers to purchase properties are submitted formally in writing from the buyer’s solicitor. Then accepted verbally by the seller’s agent. The home will then be placed “under offer” or “subject to conclusion of contracts”. Meaning that property is essentially “Sold” in good faith. Once a property has had an offer agreed, Estate Agents should not encourage other offers. Once missives have been concluded a contract has been drawn up, the sale is legally binding. Both parties cannot resile from this agreement without there being financial penalties. Although, prior to the missives being legally concluded, there is technically nothing to prevent a seller from accepting a higher offer.
Yet in Scotland, taking a person at their word appears to be more respected.
Why is Gazumping less common in the Scottish Property Market?
Thanks to the Law Society of Scotland, solicitor estate agents are guided by strict regulations set to protect buyers from gazumping. Although legally a seller must be informed of every offer that comes in, solicitor estate agents cannot accept a new offer for the seller if they have already agreed an offer from another party. If the seller did want to accept that second offer, they must find another solicitor to accept the offer on their behalf, as their previous solicitor would have to withdraw from acting on their behalf for the legal conveyancing of the sale. Additionally, some solicitors will refuse a client who has gazumped. This would also cause unfortunate delays in the process for both buyer and seller. Many would rather accept the first offer just to sell their house faster.
How can I avoid being Gazumped?
- Ask for the property to be taken off the market
- Get to know those selling the home
- Be insured and be prepared. Home Buyer’s Protection Insurance can help cover your legal, survey and mortgage lending costs should your purchase fall through
- Move quickly
What to do if you are Gazumped
Unfortunately, the only way to avoid a gazumping is to gazump your gazumper. It is never a pleasant experience and most estate agents and solicitors will avoid the practice like the plague. However, if it does happen, you can plead your case with the seller. Alternatively, assess your finances, and see if you can make a better offer. However, be careful not to get caught up in the frustration and bid outside your budget.
In summary, gazumping does happen in Scotland but rarely. In Scotland there are far more hurdles and restrictions in place to prevent the practice. Gazumping is unethical and often unnecessarily prologues a sale for both buyers and sellers. It appears to be an unspoken code in Scotland that the practice of gazumping is poor form.
If you are considering buying or selling, or have any questions for the Watermans Legal team, get in touch- 0131 467 5566 or [email protected].