News, Culture & Society

Time to dump the gazumpers: 2 in 5 home sales hijacked by brazen bids

The pandemic property frenzy has seen buyers stop at nothing to get the keys to their dream home.

And with demand and prices rocketing, as well as huge stamp duty savings up for grabs, competition has been fierce.

But the buying boom has brought out an ugly side of the market: gazumping. And estate agents have told us that the problem has never been worse than over the past few months.

Estate agents say the problem of gazumping – where a seller accepts a higher offer despite already having a verbal agreement with another buyer –  has never been worse

The industry is now calling on the Government to outlaw the gazumping cheats who derail sales and cost honest buyers thousands of pounds.

Figures last week revealed that two in five buyers secured a home by putting in a better bid after a sale had been agreed but before contracts were exchanged.

The practice, which is not illegal in England and Wales, was the leading cause of property deals not going ahead in the past 12 months, according to the research from comparison site Comparethemarket.com.

Gazumping in Scotland is much rarer because an agreement becomes binding the moment a written offer is accepted. 

In Australia, it remains a grey area but Queensland has virtually eliminated it with a similar system to Scotland.

Iain McKenzie, from The Guild of Property Professionals, says: ‘While the situation in Scotland is much better when it comes to gazumping, it is by no means perfect. 

Most estate agents in Scotland are also solicitors and therefore overseen by The Law Society, which considers gazumping a disciplinary offence.

‘This means most estate agents in Scotland would have to withdraw their services if a client wished to accept a higher offer.

Biggest rise in over 16 years: UK house prices rose at the fastest pace since November 2004

Biggest rise in over 16 years: UK house prices rose at the fastest pace since November 2004

‘Of course, this means that gazumping can still happen, it’s just unlikely in practice.’

Demand for property exploded in May last year after a seven-week buying freeze over lockdown. 

House prices soared 8.9 per cent in the year to April, according to the ONS, as buyers battled to complete purchases after the Chancellor announced a stamp duty holiday to save buyers thousands of pounds.

Figures from Nationwide show house price up by an even greater amount, with annual property inflation to June running at 13.4 per cent and adding £29,000 to the cost of the average home, which reached £245,432.

And, last month, a record 37 per cent of properties sold received offers from three or more buyers, according to estate agent Hamptons. This was up from 19 per cent in April.

This is owing to the fact that there is limited stock on the market because of the reduction in stamp duty thresholds and people are desperate to move 

 Zara Banday, Slater Heelis

Yorkshire and the Humber remains the most competitive market, where more than half of homes sold in June had three or more offers.

Property agents told us that gazumping had become rife in Chesterfield and Sheffield — with outbid viewers returning later to give increased offers directly to the homeowner.

Zara Banday, head of residential property at law firm Slater Heelis, says: ‘Gazumping has never been worse.

‘In the past decade the practice has increased, and more so in the past 18 months. 

‘This is owing to the fact that there is limited stock on the market because of the reduction in stamp duty thresholds and people are desperate to move to benefit from the stamp duty saving.’

She adds: ‘Being gazumped can be extremely disappointing for clients, and costly, because they have often spent money on searches, surveys, mortgage arrangement fees and incurred legal fees. 

If a client is gazumped then, unfortunately, there is no obligation on the seller to reimburse the buyer for their loss.’

Ms Banday says people are ‘crying out for change’ to the current legislation, which allows buyers and sellers to pull out of the sale, risking losses of thousands of pounds, with no comeback. However, she says she cannot see changes any time soon.

She says a new law would need to have caveats to stop punishing buyers who had to pull out of a sale for genuine reasons, such as redundancy.

David Hollingworth, from mortgage broker L&C, says: ‘Most people would support a ban on gazumping so they know where they stand when buying or selling property. By making gazumping illegal it would remove the uncertainty.’

Craig Hedges, who works for online estate agency Yopa in the West Midlands, says he had not known a buyer to be gazumped for years — until recently.

He says: ‘I have been working on the sale of a property since August last year. The sale was agreed at £180,000 and, on what was the proposed day of exchange and completion, a neighbour walked by and asked the family how much they sold it for.

‘This neighbour then went on to offer £15,000 more on the spot. The vendors agreed and pulled out of the existing sale.’

I had to find an extra £10,000 

Shocked by the system: Abbey Robb had to find another £10,000 after a gazumper forced up the price of her dream property

Shocked by the system: Abbey Robb had to find another £10,000 after a gazumper forced up the price of her dream property

Therapist Abbey Robb, 42, was forced to find another £10,000 after a gazumper forced up the price of her dream property.

It had taken 18 months to find the £450,000 four-bedroom maisonette with a big back garden in Limehouse, East London.

Her initial offer of £430,000 was turned down so she increased it to £445,000, which was accepted. 

She wasted no time in instructing a solicitor and booking surveys. But a few days later the agent told her to ‘hold fire’ as someone else had offered ‘a lot more’.

Abbey, who lives in Colliers Wood, South-West London, says: ‘I was shocked. I am from Australia, where this does not happen. Offers are binding as soon as they are agreed, and if you pull out you face penalties.’

Her revised offer of £455,000 was accepted and she is now nervously waiting to exchange contracts. She adds: ‘It crosses my mind that I could be gazumped again.’

James Edge, 39, was stung by a gazumper just weeks ago. He and partner Susan Helby, 41, offered the asking price of £350,000 on a two-bedroom end-of-terrace cottage near Winchester, which was accepted.

He then secured a mortgage with a non-refundable fee of £1,000 and instructed a conveyancing firm and surveyor.

However, a week later the agent called him and said a previous viewer had offered £360,000 and asked James to reconsider his price. He decided to stick to his initial bid and the seller accepted the higher offer.

James, head of engineering at a consultancy, says: ‘It felt inappropriate and unethical. We had an agreement in writing. It was frustrating but the agent told me nobody had done anything wrong.’

David Carter and his wife Kaya, 36, made the decision to sell their home in Manchester in September and move to Sheffield to be closer to family and good schools for their two children, Reuben, six, and Phoenix, one.

They had found their dream home — a stone-fronted three-bedroom semi-detached house — and the seller accepted their offer of £280,000.

David, 32, moved quickly and even dropped the asking price of their home to speed up the sale. But in March, when the family were ready to move, the estate agent rang to say the seller had sold the house to a buyer who had offered £25,000 more.

The Carters sold their home anyway, put their belongings in storage, and have now moved in with Kaya’s parents while they wait to exchange on another property.

David, a technology developer, says: ‘I do find myself waiting for a call from the estate agent to tell me the property’s gone to someone else. It is massively unsettling and you end up not trusting anyone.’

Another reader, who did not want to be named, saw her property purchase fall through the day before the contracts were due to be exchanged in January.

By this point she had spent £4,000 on solicitors’ fees, surveys and other charges, and had remortgaged her house to raise £90,000 to put towards buying the £215,000 three-bed semi.

The mother-of-two, who works as a nurse, was gazumped by a buyer who offered £30,000 more than she had for the house in Taunton, Somerset. 

She says: ‘I cannot believe how unethical this practice is and it has really affected me. I have gone through so much agony and this is so wrong. How can people get away with ruining someone else’s life? It needs to stop.’ 

Peter Pert was really hoping to move on a year after his 31-year marriage ended and the death of his mother in January. 

He fell in love with a semi-detached bungalow in Broadstairs, Kent, and put in an offer of £340,000 — £15,000 above the asking price — which was accepted. But the next morning the estate agent told him a higher offer had gone through and asked if he could raise his.

Peter, who works in property maintenance, could not and, as a result, he lost the sale and the buyers of his own house. He says: ‘I’m deeply, deeply upset and my fingers have been badly burnt by this experience.’

A Government spokesman says it has been considering introducing ‘reservation agreements’ since 2019. 

This would ensure a commitment at the point of agreeing the sale and a penalty if either side pull out. It has carried out a first phase of research and is now looking at trials.

A spokesman says: ‘We intend to trial the use of reservation agreements where both buyers and sellers make a commitment to the transaction at the point of offer to reduce the fall-through rate.

‘While this work paused over the past year owing to the pandemic, we are now in discussion with the property industry about how best to restart this work and will announce further details in due course.’

a.murray@dailymail.co.uk

What you need to know each week: The This is Money podcast 

Want to know the most important things you need to know about money each week, what has caught our interest and what made us laugh? Listen to the weekly This is Money podcast. 

Press play to listen to this week’s full episode below, or listen (and please subscribe you like the podcast) at iTunes, Acast and Audioboom or visit our This is Money Podcast page.

 

Best mortgages

Read more at DailyMail.co.uk