Gazumping

There are lots of other ways to cause house-purchase stress in Scotland, though. Early on, there's the throwing of large wedges of cash speculatively at sharp-suited gravy-train-passenger surveyors for several minutes of their time spent looking at nothing much other than a form with tick-boxes on. Later on, there's the swamp that is `completion of missives'. It may not be `gazumping' as such, but it's still quite easy to end up with nowhere to live at short notice and considerable expense.

Not even that. Pre-contract, your mind isn't made up, so you can't change it. To outlaw gazumping would be to compel people to commit themselves before they're sure.

Frankly, the problem lies with established practice, whereby it takes people weeks/months to make up their mind. Get rid of the foolish notion of trying to complete on sale and purchase simultaneously, which is what makes the negotiations so much more difficult and time consuming that they would be otherwise, and the problem will go away because people will be able to make up their minds much quicker, as they usually do in Scotland.

The only real difference between England/Wales and Scotland is that the contract comes into being quicker. Typically in England it might be six weeks from initial offer to contract, with completion at eight weeks, i.e. two weeks from contract. In Scotland, contract would typically come into being within a week, and completion still at eight weeks. So the uncertainty period is only a sixth as long, and often less.

In article , StephaneN writes

Do you also believe that there should be a law against people making an offer, having a survey, then revising their offer downwards, or withdrawing from the purchase. Or a law against people offering for several houses, then only buying one and withdrawing from the rest. Or a law against people making an offer, and then taking 6 months to complete the transaction. These things happen many many more times than gazumping, and create the same stress for the seller as gazumping does for the buyer.

What most people do not know is that The Estate Agents Act requires that a property is fully marketed until an exchange of contracts and all offers put to the seller. Thus, in real terms, the Law actively encourages gazumping. This will not change when the government pass the law which requires home information packs etc..

The Scottish system requires that all people interested in a house spend money in advance of making their offer, so equally stressful.

Kind Regds

Why not? What causes the delays?

Thanks for the advice about the North! I am not suggesting a law against mind-changing, but a certain regulation to protect both side when doing a deal will certainly do good.

If both parties are committed enough to wish to seek such protection, then why don't they just do the whole deal there and then?

The in-laws. On holiday. A hotel.

Laura Vaveridges says that for everyone with nowhere to stay there will be someone with two houses, so:

Having sealed the deal, try to fine-tune the dates post facto. You never know what flexibility there might be if you don't ask.

The point really is that you don't want the trivial problem of a bit of uncertainty over a few days'/weeks' living arrangements to get in the way of doing the deal, or to contribute to the risk of the other party backing out. In other words those people who get most het-up over what gazumping has done to them would, I'm sure, have felt having to stay elsewhere for a few days, perhaps putting the furniture in storage for the duration, very much the lesser evil.

But don't you think its fair that if someone offers more money for something the seller should be allowed to sell?

I mean it is not ethical, especially if someone has gone to considerable expense...but should their be perhaps a point where up until that point, someone can offer a higher amount.

Perhaps up until the point that the buyer has commited some funds, and if the ohter person refuses the offer then he has to forfeit those costs...that were incurred by the buyer.

Something like that would be fine, then the seller can take advantage of being offered a higher amount of money.

I know full well that if someone offered me more money and I was selling a property I would most definitely take it.

How long have you got

purchaser takes 2/3 weeks to make mortgage application. Lender takes 2 weeks to get references from employer, landlord, etc. (not necessarily the lenders fault). Surveyor takes 1/2 weeks to come out, then 7-10 days to issue report. Surveyor requires various other reports to cover his backside e.g. timber & damp, electric, plumbing/gas, general builder report etc.. These take 2/3 weeks to get together. Purchaser then comes back to renegotiate price due to the contents of reports, vendor pissed off because of delays, doesnt agree, sale falls through.

Solicitor doesnt apply for local search until mortgage offer received, this takes 2/3 weeks, (6 weeks in Trafford at present). Solicitor doesnt read contract documents properly until he/she thinks they are ready to exchange, sees some things to ask questions about - another week or two etc. etc. etc.

Chasing on our part has little, or no, effect - unless we have another party interested in the property, then the original purchaser gets really pissed off, calls us all the names under the sun, then all these things seem to happen in a day or 2, and it exchanges.

The solution is quite clear

Does anybody know what is the legislation in other countries? (ie Europe, France, Spain ...). In most of the cases, I agree that both parties comit themselve and the deal goes without trouble. But I think there is still a large number of people who experience any type of "Gazumping" and this should be regulated. A new offer received or a refusal to sell to a specific buyer should be written on paper and sent out to the the person concerned. At the moment there is nothing who stops a seller who comitted to a sale to withdraw at the last minute beacause somebody made a better offer than the original buyer!(even £1!). In our case, we actually decided to finally withdraw from the deal as no news was received from the seller. After trying to contact the seller and his solicitor, we realized that something was going wrong. Being left without news or instructions is the worst. A little bit of common sense, respect and positive thinking willmake the market change. This is woth than the stock exchange!

None of that is relevant. Ideally the purchaser should have got an agreement in principle in advance of making an offer, but failing that, and provided the requisite confidence is there, he may as well proceed on the basis that there will be no problem getting a loan. There is therefore no bar to exchanging without the loan offer formally in the bag. The purchaser would of course risk being sued for damages if no loan should materialise. C'est la vie.

You make these guys sound like tradesmen from the 70s who arrive with their thermos flasks and the first thing they do is have a tea break. We can get a surveyor tomorrow, and an oral report the same day, with the written one a day later.

Well, if the surveyor throws up specific problems which require the odd specialist report, these reports go to the client in the first instance, and if necessary to the surveyor for further comment. If the client is keen enough to proceed, he'll be able to take a view on whether the dry rot simply needs a bit of money throwing at it or whether it's going to kill the deal. Either way, it should resolve itself early.

Fair enough, but such problem properties are the exception, surely.

Which solicitor? Buyer's or seller's? And who cares? You put in the contract that the sellers shall provide clear search certificates at completion. Not necessary for exchange.

Unforgivable.

Yes. Pretend there is another buyer, and lose the one you've got. Zero birds in the hand are worth one in the bush, as they say.

It's not as simple as that. Do they have the funds? Will they pull out? What about the people who offered to buy your property and you accepted? I know everything is subject to contract but if someone offered you 90 pounds for something verbally and you had accepted but you knew that it couldn't be proved that you had accepted and then someone offered you 100 pounds would you renege on the agreement?

If I accepted an offer I would go through with it as long as there had been no sign of the other person pulling out. If I was the purchaser I wouldn't change my price unless there were problems with a survey. I did have problems with a survey once so I gave the seller a copy of the survey and they reduced their price.

The only problem I had was once when someone made an offer but then couldnt be contacted. Eventually my estate agent agreed to put the house back on the market but I got rid of them when I visited them a week later and still saw the sold sticker across my house! Their excuse of only changing their window display on certain days was ignored.

There is one situation I can understand regarding selling at a higher price. If the market generally moves upwards and the potential buyers had taken a long time to finalise the deal I would give them a deadline and then put it back on the market but I wouldnt just sell in response to a gazumper.

Peter Saxton from London snipped-for-privacy@petersaxton.co.uk

With house price inflation running at 25% it would seem not at all unreasonable, when accepting an offer of, say, £150k, to stipulate that the price will go up by £100 per day until exchange.

That should focus the mind of a dallying purchaser.

Most of your answers suggest that you live in a different real world to me. I too can purchase a house within a week or two, because i know how to do it, and am generally motivated to do it. But most purchasers allow themselves to be driven by the speed of their suppliers, (surveyors, solicitors, lenders etc.).

If we pretend we have another buyer, (when we dont have one), it is a criminal offence.

I recall selling my own house in 1999. I got my solicitor to obtain a local search, obtained a Timber & damp report, an electricians report, a structural engineers report, the buyers obtained repeats of everything in their own time, and the estate agent seemed reluctant to introduce other interested parties for fear of offending the first. It went through eventually.

Very good idea.

Peter Saxton from London snipped-for-privacy@petersaxton.co.uk

I do. It's called Scotland. And yes, it is real.

OK! I think I should have known that.

You guys get to the meat of a deal a long time before we do here in England. Common practice means that, whilst we can offer parts of your system here, people resist it because it means a level of commitment .

In article , Ronald Raygun writes

I find that these are fairly worthless and don't seem to make much (any?) effect on the timetable.

The surveyor is instructed by the mortgage company, generally after everything else about the mortgage has been agreed, and I would say generally book appointments about a week in advance.

No, caveat emptor, the purchaser's solicitors get the local search, and for some reason mortgage companies don't like personal searches, so the solicitor asks their client for money for the local search, waits for the cheque to clear before sending off to the council. At exchange things become binding, so they can't exchange subject to a clear search.

They probably are worthless, but only if the purchaser is already totally confident that a loan is likely to be in the bag. In borderline cases it is useful for the prospective purchaser to know how high his budget is.

As for timescale, I agree that it needn't affect matters. The loan offer need not be in place before exchange, merely in good time for completion. Nevertheless, to exchange before the offer is there would be very risky, and I (fondly) imagine that if an agreement in principle had been obtained in advance, then the formal offer of advance could be secured pretty well by return of post, as all that remains for the lender to do (having already deemed the borrower worthy) is to verify the price is in range and supported by the valuation, with all the right boxes ticked on the surveyor's form to say the place isn't going to get swallowed up by a dormant mine shaft.

Not here. The purchaser instructs the surveyor, before the offer is even made. The surveyor should be on the approved list of surveyors acceptable to most lenders, and then the surveyor will issue a separate report to the lender if necessary (without need for a further visit).

"Caveat emptor" may place the onus on the buyer to make sure the searches are clear, but one way of doing that is to offload the responsibility onto the seller by making it a condition of the contract. That's the way it's traditionally done here. The seller pays for them and exhibits them to the buyer a week or two before completion. The buyer then has a few days to satisfy himself that they are OK, and there remains a right to pull out without penalty, provided they show something materially prejudicial to the interests of the buyer. There will be well defined standards by which such prejudice will be judged, this is not a loophole capable of being abused by a buyer who wants to pull out for no better reason than having changed their mind.

The only times I've paid for searches is for remortgaging. For purchases it's the seller who pays. The buyer pays for his solicitor, the surveyor, any specialist reports needed, stamp duty, and recording dues, but no search fees.

Yes, the *contract* becomes binding, and it is made clear precisely what flavour of dire consequences await whichever party breaches it. That does not necessarily mean the transfer will certainly go ahead.

You have little faith in what in law can be done. In Scotland we certainly can and do exchange subject to a clear search.