Gazumping occurs where a vendor has agreed to sell the property to a purchaser for an agreed price and then sells to another purchaser who has offered a higher price. Gazumping is legal because until exchange of Contracts, either party is free to change their mind even if a verbal or written offer and acceptance of a purchase price has been agreed. Only a signed and exchanged Contract for Sale is legally binding on the parties. However, once Contracts have been exchanged a vendor cannot accept another offer from a different purchaser.
Once you have found the property you like, you are likely to have completed the hardest part of the entire process. Now it is time to make sure that you secure the property and avoid being gazumped.
Before moving forward, remember these three things:
- Auction or Private Treaty? Even if the property is due to be auctioned, would the vendor be open to accepting an offer prior to the auction? You can only find this out by speaking to the agent. Sometimes the agent will tell you that the property has to sell at auction but in reality the vendor may accept a reasonable offer prior to the auction. The agent is required by law to disclose all offers to the vendor.
- Find out from the selling agent how much the property is likely to sell for and whether the property will be within your budget. Sometimes it will be difficult to obtain a clear indication of the likely selling price which is why it is important to review the details of any comparable sales. Ask the selling agent for a list of the comparable sales that they used to assess the likely selling price of the property. Try to find out from the agent how much interest there is in the property. This is important because the level of interest may affect the strategy that you use to secure the property and the ultimate selling price. Ask the agent how much they originally appraised the property for. They may not tell you but it's worth a shot!
- Obtain the Contract. Instead of telling the agent that you are interested in the property, just ask for a copy of the Contract. This indicates that you may be interested in the property while still playing your cards close to your chest. Get the Contract reviewed by your solicitor or conveyancer as soon as possible. They can tell you whether the Contract reveals any problems with the property and whether they recommend any changes to the Contract before you sign it.
To ensure that you end up with the property you want, think carefully about whether and how to make your offer. If the property is due to be auctioned, sometimes it may be worth waiting until the auction. Other times it may be worth making an offer before the auction.
If you are going to make an offer, make sure that you don't lose the property to another buyer. This may be difficult because you have little control over whether a vendor will ultimately accept a higher offer than yours. However, there are strategies that you can use to reduce the risk of this happening. For example, minimise the time between declaring your highest offer and providing the signed copy of the Contract. The shorter the time, the less the risk of another buyer making a higher offer.
Remember that property buyers agents work to eliminate the risk of being gazumped. To ensure that you don't miss out on the property that you like, speak to Buyers Domain property buyers agents today and ask how they can help you. Buyers agents are experienced property advisors and work hard to give their clients every possible advantage to secure the property of their choice. Buyers Domain are among Sydney's leading property buyers agents operating in Sydney's Inner West, Eastern Suburbs, North Shore and Northern Beaches .