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THE RETURN OF GAZUMPING?
May 2009
A Lancashire property solicitor is reporting a recurrence of gazumping – a practice usually only found when the property market is buoyant.
Gazumping occurs when the sale has been provisionally agreed, but contracts have not been exchanged (and therefore a legal commitment in place), and the buyer is out–bid by another buyer making a higher offer.
Gazumping has been common in the past but is usually associated with there being more prospective buyers than there are properties for sale. It is unusual in a slow market.
Now Graham Ireland, conveyancing partner with Haworth & Nuttall Solicitors, a law firm with offices in Blackburn, Accrington and Great Harwood, reports that he has had a number of recent instances where buyers have been gazumped.
He said: “Gazumping usually only rears its head in a sellers’ market, when prices are buoyant and there is stiff competition for properties.
“However, there seem to be a significant number of re–possessed properties for sale at the moment where buyers who believe they have made a successful final offer to buy a property find that they have been gazumped.
“As property prices begin to increase – Nationwide figures showed a 1.2 per cent rise in May – one of the downsides will be that gazumping will become more commonplace as buyers bid against each other for properties which are perceived as being low priced.”
However, Graham added: “It is too early to say that the market is significantly improving. The first time buyer market is still struggling.
“Many lenders have recently increased their administration charges for dealing with mortgage applications and, quite frankly, first time buyers, on the whole, are not in a position to raise the amount of deposit they would need to put towards a purchase. This is entirely down to lenders current requirements.”