Buyer beware - bad faith is back

The housing market: as confidence slowly returns, so does gazumping

Gazumping is back - just as the housing market is showing signs of a distinct upturn.

Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents, says that so far this year there has been a substantial rise in complaints to the NAEA about sellers reneging on prior agreements after receiving higher offers.

The NAEA had previously fielded a barrage of calls about "gazundering" - where buyers use a variety of excuses (such as potential repair bills or less than satisfactory surveys) to demand a reduction in price.

Both a resurgence in house-price optimism and a shortage of what estate agents call "desirable properties at sensible prices" have fuelled the gazumping renaissance.

Confidence in the housing market has hit a four-year high, Britannia building society claimed last week, while the Halifax reported a ninth consecutive monthly rise in its house-price index, giving a 2.7 per cent year-on-year increase in average prices.

But sellers are still loathe to sell for less than they paid, with the result that buyers are competing for the few good, reasonably priced properties available.

Christopher Hook, of Hampton's estate agents in St John's Wood, London, notes: "In our part of the world, we've found a dearth of quality family homes. If one comes on to the market, there can be a high level of interest and gazumping."

Trevor Abrahmsohn, chief executive of the London estate agents Glentree Estates, adds: "Gazumping is bound to get worse until the shortage of better-priced stock is put right."

The Scottish system is often cited as a panacea to the situation in England and Wales where buyers have little power to prevent vendors changing their minds until contracts are exchanged.

"In Scotland, buyers put in what are called 'missives' (offers to purchase) and properties are advertised with closing dates," says Mr Dunsmore-Hardy. "Once that date falls due, lawyers acting for the seller decide which bid to accept and that offer becomes binding.

"However, gazumping does happen in Scotland, as conditions attached to the sale still give vendors the opportunity to pull out. This is tough on buyers who have already paid for a survey."

Few professions are as indelibly tarred with the brush of sharp practice as estate agents. So it is no surprise that buyers often blame agents for being gazumped. None the less, Mr Hook insists, reputable firms can impose their own safeguards. He cites the example of a recent sole-agency sale through his office. One person within the firm safeguarded the vendors' interests while individual negotiators reported offers to him independently. At the end of a certain period, the vendor simply chose the bid that met his financial and logistical requirements.

"Lock-out" agreements can help. These, usually informally, give buyers a specific timeframe in which to exchange, while vendors undertake not to deal with anyone else during that period. The NAEA would also like see the Government bring in a system of conditional contracts, which would give more certainty at an earlier stage of conveyancing.

But is gazumping necessarily wrong? Mr Abrahmsohn contends that gazumping is a product of market forces. "We sometimes encourage legitimate gazumping by setting a guideline price sufficiently interesting for purchasers to exceed," he says. "We then submit the best bids to our vendor, harnessing gazumping in the same way as auctioneers. I see nothing wrong with that at all."

Mr Abrahmsohn's approach is underpinned by what he calls "a pledge of commitment". Buyer and seller shake hands on the deal, pledging not to be distracted by higher offers and/or another house in better condition.

Buyers' only real protection may be to move as fast as possible once they find somewhere they like. Given all the papers on a freehold sale and a quiet phone, most solicitors can complete the necessary conveyancing in a matter of hours. By comparison, weeks spent exchanging correspondence not only enables the legal profession to justify its fees but also gives sellers more time to change their minds.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London