Gazumping, the fractious facts
Thursday, 26th June 2014
It’s heart-breaking, you agree to buy a property and then all of a sudden it is taken from you by another buyer making a higher offer, but who can you blame, the agent, has this been orchestrated to achieve a higher fee?
There is no way of knowing thus the agent often takes the full force of frustration, rightly so sometimes, but what are the facts, when is gazumping ‘gazumping’ and why does it happen?
In any market gazumping can happen, certainly with a property that attracts a lot of interest. Right now, in the chaos that has been common place for the last few months, gazumping is an almost daily occurrence.
The fact is that in most instances there are two beneficiaries when gazumping takes place, the sellers are getting more money and the buyers have got the property they want to buy.
If you have recently sold, you will know most agents charge a percentage of commission, if you took this to be 1% on £250,000, our fee would be £2500.00, if the property then receives a higher offer of £255,000 and the seller switches buyer, our commission will only increase by £50.00, honestly, given the stress it causes, it really isn’t in our interests to encourage gazumping!
It is also a little known fact that Estate Agents have a legal obligation to report every offer made to the seller and of course, to act in the best interests of our client. So whilst we may not encourage the higher offer, if it is made, we have to put it forward regardless of the position of the sale. It is a regretful loophole in the law.
Gazumping is also a matter of timing, if the sale is close to exchange and you lose the property, you have been gazumped, no questions asked. But much of what we deal with these days is at the offer stage, for instance three or four offers being received on a property at once.
This is a nightmare situation for any agent to have to deal with, firstly we cannot be seen to be favouring one buyer over another, for instance, suggesting a seller takes one offer because the buyer is using our financial advisor, that’s an industry no no!
We offer advice to the seller of course, but ultimately the best way to handle this situation is to take the best offers from all parties, gain as much information on everybody’s position, then provide this to the seller for their instructions.
At the end of the day it is the sellers’ decision who they decide to sell too and it’s not always the highest bidder.
It’s the sad truth that there will always be a loser in this situation, it’s frustrating and often upsetting, but it really isn’t truly gazumping.
At Jacobs Steel we do everything we can to avoid these situations, but in such a buoyant market often such situations cannot be avoided.