Want to avoid Gazumping? – Look to auction.

You may have seen press reports over the weekend about how the Communities Secretary Sajid Javid wants to clamp down on gazumping to help make buying a house easier and cheaper. I was really pleased to see this being talked about so widely as it’s an obstacle we’ve been having to tackle for many years and is something that far too often can cause a sale to collapse.

It’s one of the reasons I love working for an auction business – we avoid gazumping entirely.

To explain, gazumping happens when a seller has verbally agreed a sale price for their property but then later accepts a higher offer from another purchaser subsequently meaning the original buyer loses the property. It can also occur when a seller raises the asking price at the last minute after previously accepting a lower offer.

With an unconditional sale by auction the exchange takes place on the fall of the hammer in the auction room. The buyer pays their 10 per cent deposit and the sale is secure making gazumping impossible. Who doesn’t want that?

Once contracts have exchanged, the sale is legally-binding and a deposit is paid meaning the buyer cannot pull out of the sale and the seller cannot agree a sale with another party.

Currently with private treaty sales, the exchange of contracts usually only takes around 12 weeks or more after the initial verbal offer has been accepted. That’s three months for the seller to potentially accept another offer and break the sale chain. A concern in any sale.

With our sales by auction, the seller gets four weeks of advertising prior to auction, on auction day when the property sells under the hammer contracts are exchanged and completion takes place only four weeks later. That’s a maximum time of eight weeks for a secure sale.

Also, as part of Mr Javid’s plans to clamp down on gazumping he is looking at encouraging sellers to put more data online to speed up the house-buying process and encourage buyers and sellers to pull together evidence so homes are ready for sale.

This is also addressed with a sale by auction as it cannot take place without a legal pack for the property. We ask all our vendors to instruct their solicitors to create this pack for potential buyers to review as part of their due diligence process prior to bidding.

A legal pack can often include water & drainage and local authority searches, special conditions, Land Registry documents and the Energy Performance Certificate (EPC) meaning buyers have full disclosure of the property they are purchasing. Of course we always recommend they view the property in person too – just in case!

However, even with all these safeguards we do appreciate that many buyers do not consider a sale by auction as their first option when looking to dispose of their property. It is still largely thought of as a last resort option but that’s simply not the case in recent years.

The sale of property by auction is becoming increasing popular – we have sold more than 1,110 lots so far this year and raised over £120m in sales – yet it only accounts for around 3% of the total property sales in the UK. I would hesitate a guess that that percentage will rise in coming years if Mr Javid’s plans come to fruition.

If you look at Australia for example – where gazumping also takes place – the percentage of auction sales is much higher at around 30%, a rise of around 10% on the previous two or three years, possibly again to avoid sales falling through…?

The eight-week call for evidence from across the property industry launched today will provide interesting reading and can be nothing but positive for seller and buyers alike. Whatever the outcome it should make the process of buying a property much more straightforward which is great news for all concerned.

Written by Andy Thompson

EAN Content

Content shared by this account is either news shared free by third parties or sponsored (paid for) content from third parties. Please be advised that links to third party websites are not endorsed by Estate Agent Networking - Please do your own research before committing to any third party business promoted on our website.

You May Also Enjoy

Home and Living

Top 4 Indications That Your Two Story Home is in Need of Pest Control

Have you noticed tiny pests crawling around your home? Pests are more than just a nuisance. They can cause damage and spread diseases. If you live in a two story home, it can be even harder to spot the signs of an infestation. Knowing what to look for is the key. In this guide, we…
Read More
Estate Agent Talk

Matching Your Needs: Choosing The Ideal Residential Property Management Services

Owning residential properties can be an excellent investment, but managing them can quickly become hard. From handling tenant issues to maintenance and rent collection, it’s a time-consuming task. Fortunately, there is a solution—property management services. They can handle these tasks for you, freeing you to focus on other priorities. However, with so many options available,…
Read More
Breaking News

Third of Private Renters Are Struggling to Afford Their Rents Says New Research

Over a third of all private renters are finding it difficult to afford their rent according to new research out today. Whilst overall 35 per cent of renters said they were finding it difficult or very difficult to afford their rent, this proportion increased to 56 per cent for those not in work due to…
Read More
Home and Living

Why Select High-Quality Shower Drains for Stunning Wet Room Design

A wet room is a fully waterproofed bathroom with an open shower area, where the floors and walls are designed to handle water exposure. One of the most important aspects to consider when designing a wet room is your shower drain. With a great range of available designs, homeowners and those in the construction industry…
Read More
Breaking News

Bank of England’s decision to hold the Base Rate – Industry Reaction

The Bank of England held interest rates at 5.25% for the seventh time in a row. The decision comes despite official figures yesterday which revealed inflation had fallen to the Bank’s target of 2% for the first time in nearly three years. Here are some thoughts from the property industry.   Rightmove’s mortgage expert Matt…
Read More
Breaking News

Breaking Property News – 20/06/24

Daily bite-sized proptech and property news in partnership with Proptech-X.   OpenBrix, Home, & TDS unite to digitally upgrade the tenant user experience Full disclosure Adam Pigott and the team at Openbrix are one of my original and long serving clients in my day job of getting proptechs from MVP to exit (Proptech-PR). But as…
Read More