Is gazumping fair?

I think all’s fair in love and war. My SIL is selling a house and in that situation. She really likes the buyer who made the first offer but another couple gazumped him. She needs every penny she can get to buy another house, so needs must. It’s a tough time to buy or sell at the moment.

Buying and selling is really difficult at the moment. Apparently offers won't be accepted unless your house is sold or you have enough finance to complete.
It's unfair on prospective buyers who have spent money on surveys etc if they are then gazumped.

Years ago we had a higher offer on our house but had already accepted an offer from a cash buyer. We stayed with the cash buyer (she proved to be a nightmare!).

Before finding and buying this house, we had an offer accepted on a beautiful property. I don't know if the seller accepted a higher offer, but I do know that he rejected our offer in favour of selling to a relative.
I still look wistfully at that house as I can see it from one of my regular walks.

In Australia although not unknown this is far less likely to happen.

When an offer is accepted by the vendor a contract is drawn up and it is binding after the legal cool off period which is usually 3-5 days. A deposit is paid and the date of settlement is set. There is usually a clause that makes the contract subject to a satisfactory inspection (Survey) and sometimes but less often these days subject to the purchaser getting finance. These need to be completed in a specified time - usually 14 days.
The purchaser would loose their deposit if they pulled out after the contract became binding and the vendor is legally obliged to continue with the sale.

Most sales are settled within 90 days, so everyone knows when the move is. If a vendor has not bought a new place by then they still must vacate the property unless they come to an agreement with the purchaser to stay. In that case the purchaser is entitled to charge rent.

Years ago we had a higher offer on our house but had already accepted an offer from a cash buyer. We stayed with the cash buyer (she proved to be a nightmare!).

Yes, this happened to us, Callistemon. Our buyer was lovely though. And the would-be gazumper was an awful bumptious type who said we must be fools for turning him down.

I like the sound of that Australian system, Spice101. DD1 and family agreed to buy a house last April and didn’t get to move in till December.

What also happens is the estate agent phones to say there has been another bidder and you will have to fight it out by submitting your top offer which will go up against their top offer. The highest bidder wins. If you are dead set on the property this pushes you to submit the very highest bid you can manage, for fear of losing out. I have won on both occasions, but strongly suspect there was no other bidder, it was just a ploy to get me up to my highest amount. I ended up bidding more than the asking price from this scam (that's what I think it is).

Before we bought our house (aeons ago) there was another we viewed and really liked - but put our offer in just too late. The vendor told us that he’d just accepted an offer from someone else, and although he’d prefer us to have it (he didn’t care for the other buyer) he couldn’t bring himself to go back on his word.
Different times!

Maggiemaybe

I like the sound of that Australian system, Spice101. DD1 and family agreed to buy a house last April and didn’t get to move in till December.

Very much like the Scottish system in fact.

We were gazumped when buying our first flat in London in the early 80's - horrid feeling.
In our most recent house move last year a buyer pulled out quite late as he found a house he preferred, and we lost our dream bungalow as a result - sickening.

Consequently we agreed we would stick by the offer we accepted first come what may. We are a bit poorer for it, but have peace of mind that we have played fair.

I really don't like the lottery that is the property market in the UK - so much is placed on trust all the way up and down the chain. The Australian system sounds much more reliable.

It doesn’t seem to happen here at the moment as far as I know, as nearly all sales are going through the best and final offer system where the vendor allows all people to view before the agent takes all bids . We offered £35k over asking price on 1 house last year but didn’t get it. Perhaps it depends on the integrity of the agent . Our house has been STC since last June as we can’t find anywhere to buy , and now prices have risen still more. No one has made us a higher offer.

Gazumping isn't allowed in Scotland as far as I know and it ought to be stopped in England too. Vendors obviously want the highest price they can get for their home but it is grossly unfair on buyers who have had an offer accepted and then spend money on surveys and solicitors only to find they have lost it all to a higher bid. Wrong.

England system is beyond broken

But if as in the OP’s post, the buyer was then offered a good job in another part of the country, you really couldn’t expect them to carry on with the sale. Why would they?

Very annoying for the seller, but understandable in the circumstances.

When we sold our house in England to move to Scotland, the buyer dropped their offer price at the last minute. They thought because we were buying in Scotland we were committed and would have to accept their lower offer. However, we had drawn up our new house contract stating it was subject to us selling our house. We walked away from the sale. They soon came back with the original offer but it left a sour feeling. We did not scrub the house, get rid of rubbish etc and, as they hadn’t paid for the extras they wanted we took them with us - they even had the cheek to complain.

When we sold to move here, we'd accepted an offer and then were informed of a higher offer but we stuck with the one we'd already accepted.

Unfortunately, they had to pull out because they lost their buyer but we never regretted our decision.

It is not just unfair it is morally wrong and should be banned.

If you make an offer, it should be protected from any counter offer and you should be given 8 weeks to exchange. After that it should be an open market again.

Calendargirl

But if as in the OP’s post, the buyer was then offered a good job in another part of the country, you really couldn’t expect them to carry on with the sale. Why would they?

Very annoying for the seller, but understandable in the circumstances.

I agree. But I wonder, if its considered fair for a buyer to back out before the contracts have been signed, should it also work the other way?

I’ve actually never had to buy or sell but would hate to be gazumped, the Scottish system where you pay a deposit and and it is binding on both sides

Sarnia

Gazumping isn't allowed in Scotland as far as I know and it ought to be stopped in England too. Vendors obviously want the highest price they can get for their home but it is grossly unfair on buyers who have had an offer accepted and then spend money on surveys and solicitors only to find they have lost it all to a higher bid. Wrong.

I have often thought this. Having been gazumped in the 80s madness, it is horrid. Not only lose a home, but money too if survey and searches done. Scotland seems to have a fair system. Would suggest if verbal offer on house accepted, then if gazumped the vendor should repay previous buyers costs. Seems fair to me.

I knew that three other couples wanted this bungalow, and the vendor had 'chosen me' dependent upon me paying an acceptable amount over asking. She didn't pitch me against the other bidders, luckily. But I did wonder if any of them came back, would she accept.

I had a very anxious time as her solicitor had Covid and nothing happened for the first five weeks.

Now I've got to move out to get the floors ripped out and replaced to the tune of £11K, I'm not sure how lucky I was!

Some estate agents are snakes and should be treated accordingly.

Absolutely unfair - selling your house and moving is hard enough and costly enough even without considering gazumping. It's time England and Wales moved to a system like Scotland - at the very least the buyer let down by the move should have their costs reimbursed if they are gazumped. Might make sellers think twice about letting them down.

When we sold our last house we did an open house. The aim being to get a lot of people through the door and offers made.
There was a 3 day leeway for all offers to be received and we could review them and select the best option for us. Not necessarily the highest bid. It worked out really well.
If we move again we might try that way of selling again as houses do move very quickly where we currently live,