Gazumping - 2-Bed London Apartments
As a 2-bed apartment buyer in London, when your offer is accepted, many people think that ‘that is it’…
They can start looking for furnishings and fittings!
They have bought their 2-bed apartment!
This is NOT the case…!
Gazumping can happen, which can be terrible…
Gazumping is when another buyer presents a higher offer to the estate agent/ seller after your offer has been accepted.
This offer is then accepted and you are stuck back at square one, where you have to start the search for your next 2-bed apartment all over again…
This legally can occur at any point prior to exchanging contracts, when the deal becomes legally binding.
Even worse, is that the buyer will have spent money on arranging a mortgage, paying the conveyancer to carry out local searches and surveys if they are close to exchanging contracts, and another buyer can ‘gazump’ them right before they exchange contracts and they will then lose that money that they have spent…
Some 2-bed apartment sellers can get greedy and they want to get the most amount of money for their property, regardless of the fact that they had previously accepted an offer.
Giving some sellers the benefit of the doubt, you could be partly to blame (or your surveyor/ solicitor!) if your surveyor or solicitor is taking too long to get their side of the deal done…
“Gazumping is when another buyer presents a higher offer to the estate agent/ seller after your offer has been accepted.”
So, what are some steps that you can take to avoid, as best as you can, getting gazumped?
Ask the estate agent to take the 2-bed apartment off the market for a mutually agreed period of time. That way, people will not be able to find it on the online portals.
Before you make an offer on your next potential 2-bed apartment, please ensure that you have an agreement in principle (for a mortgage) in place. Ideally, you will do this prior to beginning your search so that you know exactly how much you can afford.
Get home buyer protection insurance. This can enable you to claim back a portion of your conveyancing fees, valuation fees, survey fees and mortgage/ independent mortgage lender fees if you are gazumped and your apartment purchase falls through.
Do everything in your power to move quickly when asked to. This includes keeping in touch with your conveyancer/ solicitor, independent mortgage broker/ bank and to sign contracts when asked to.
The vast minority of estate agents’ could well make up the fact that a higher offer has been made. Simply ask them for proof that the offer has been made (in writing). As with a sealed bid, know the maximum that you can afford or that you are prepared to pay and stick to your guns. Do not try and overstretch yourself or be tempted into paying well over the odds if you do not want to. There will always be another suitable 2-bed apartment…
If you get the chance to meet the seller(s) and genuinely like the seller, then keep them informed with how you are getting on with regards to the process. Surprisingly, many estate agents’ do not keep the vendors/ sellers updated on a regular basis, so the onus may be on you to do this… Many solicitors do not allow their client to do this is an official capacity, as it side steps them, but there is nothing stopping you from exchanging emails with the vendor.
Lock out agreements. This is rare… This is where there is a contract between the vendor/ seller and the apartment buyer, which states that the home buyer has the exclusive right to buy the apartment within a certain period of time - say 12 weeks. This can be huge positive to the seller if they have had a previous buyer pull out of the apartment purchase suddenly with no explanation. You will need your solicitor to draw up an agreement…
You can, however, do all of the above and someone can come in at the last minute and offer a silly price…
As previously mentioned, look at your finances and what you are prepared to offer…
Gazumping is an unfortunate part for some people that are looking to buy their dream home…
Plan as much as you can and go through the steps above to give yourself the best possible chance to not get gazumped.