Are You a Victim of Gazumping?

congo on 09/02/2016 - 20:11
Last edited 09/02/2016 - 20:13

Hi,
Gazumping is defined by Fair trading as:

Gazumping occurs when you have a verbal agreement with an agent or seller to buy a property at an agreed price but the property is not sold to you in the end. This usually happens when the vendor (the person selling the property) has decided to sell the property to someone else, usually for a higher amount. The agent is legally obliged to pass on to the vendor any further offers received for the property up until the exchange of contracts.
If you are gazumped, neither the agent nor the vendor is obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries.

Before participating in purchasing an apt, we would always question the agent if they practice Gazumping or Dutch Auction.
Each time they would say that they do not condone this practice and insist that they will never do it.

BUT, they end up ALWAYS doing it to us. Every time. They employ delay tatics (not sending us the sale contract, but saying that they have), excuses, and they ultimately blame the vendor saying that it was the vendor's decision.

We feel cheated because we would offer a premium so that the vendor accept, but they don't exchange even though they have agreed to exchange. They wait for higher offers using our strong offer as leverage. We would pay for solicitor fees and travel costs and lose so much of our valuable time.

Is this common practice?
Is there a place where we can name and shame agencies that regularly conducted these practices?

We would like to hear advise on how to be successful in purchasing our home/apt without falling into these traps and wasting money on solicitor fees.

Thank you.

Financial

Comments

  • t_c on 09/02/2016 - 20:38
    -1

    Location = Sydney, LOL

    • congo on 09/02/2016 - 20:42

      I don't get it. Why is Sydney funny?

      • mskeggs on 09/02/2016 - 20:53
        +2

        Sydney real estate prices are stupid, so is the behaviour it generates.

        • congo on 09/02/2016 - 20:55

          Melbourne has gone up quite a bit as well?

          But yeah, we didn't have much luck last year, we had to line up just to inspect a place!!
          This year it has cooled down a lot, but still we can't find success.
          It has become so hard to get one without having to pay a premium :-(

  • mskeggs on 09/02/2016 - 20:58
    +1

    We sold an apartment in Sydney about 7 years ago. First offer was for the asking price, then we got offers from three other parties each raising the stakes $5k.
    I was prepared to sell for the asking price (obviously) but received the other offers within 24 hours - before any paperwork could be done or inspections carried out. I guess the buyer might have had legal costs.
    I hate that we were a party to the crappy price inflation, but I wasn't in a position to ignore an extra $15k.
    Cheer up, though. Those buyers are $300k ahead now!

    • congo on 09/02/2016 - 21:05

      I can understand that and we wouldn't compete or bid at all.
      But we did bid for this one because the agency said that if the owners get the asking price then they will accept and exchange with the first to sign the contract and pay the 10% deposit (we had the 10% ready to deposit into their account and the contract was signed). Higher offers would be reduced to the asking price. The vendor wouldn't accept offers higher than the asking price.

      IMO agent and vendor are being very misleading. They basically lied and used my offer as a springboard.

      Knowing that those buyers are $300K ahead now, doesn't cheer me up :-(

      • mskeggs on 09/02/2016 - 21:11

        Knowing that those buys are $300K ahead now, doesn't cheer me up :-(
        Me either!

        I understand that once you have paid a deposit it is harder to be gazumped, but not impossible. But once a seller has 10% in their hand, it takes more to change their mind.

      • kingmw on 09/02/2016 - 22:00
        +1

        I wouldn't hand over the 10% until the vendor/agent gives you their signed contract otherwise will be used as leverage. i.e. The owner has nothing to lose from asking for higher offers and everything to gain since they have a guaranteed minimum price.

        You should always threaten, in email, to withdraw your written offer quickly if they don't give you their signed contract on that day.

    • cDNA on 10/02/2016 - 09:42

      What's the best way to transfer $500,000 of cash if you're buying a house?

      • airzone on 10/02/2016 - 10:50

        A suitcase full of non-sequential unmarked bills.. Oh, BTW where and when are you taking it?

  • congo on 09/02/2016 - 21:12

    Surely, there has to be a smarter why to avoid all of these tricks that the agent and vendor can employ?

    • kingmw on 09/02/2016 - 22:04

      My advice is try not to buy in a hot market and don't be emotionally invested until the contracts are exchanged. Treat it like a business transaction because that's what the vendor and agent do.

      • congo on 09/02/2016 - 22:11

        Ok.
        So there is no legal way to avoid this?

        • kingmw on 09/02/2016 - 22:25

          Gazumping is very difficult to prove legally and it is a civil matter involving expensive lawyers with little or no compensation at the end.

        • congo on 10/02/2016 - 06:42

          @kingmw: ok thanks for the heads up.

  • cuteduck on 09/02/2016 - 21:54
    -1

    Get a buyer agent especially in the hot market!

    • mskeggs on 09/02/2016 - 22:30

      What can a buyer agent do that you cannot do yourself? All they can do is threaten to withdraw an offer if it is gazumped. Big Deal, and you just cost $1000 to pay an agent to do it for you.

  • dan76n on 09/02/2016 - 22:32

    Move to QLD.
    We just sold out home and the buyers seem pretty safe.
    Buyer puts offer on contract signed and agent brings to seller. Seller then excepts or counters.
    Once both parties agree on price then the Seller is locked in.
    Buyer has 5 days cooling off period plus 14 days subject to finance. So the buyer can just say they couldn't get finance.
    (Also 7 days building and pest but it's not an out clause unless there's big issues).

    • kingmw on 09/02/2016 - 22:57
      +1

      Can't see much difference in process compared to NSW…. except for the 14 days subject to finance.

      Only real difference as with most states/countries is demand and supply.

    • congo on 10/02/2016 - 06:45

      Normally this sounds like the process.
      But in a hot market with lots of buyers, money become king and everything else goes out the window.

  • YTW on 09/02/2016 - 22:58
    +5

    Don't pay a deposit until the other party has signed the contract. Sign the contract under the condition that the other party signs within a small, set time period (ie. by COB, within 4 hrs etc - whatever suits the situation). Withdraw your offer in writing if they don't. Tell the agents to go jump. Move on if they are screwing you around, there are always other properties.

    • congo on 10/02/2016 - 06:58

      Agent clearly stated numerous times that no higher offers would be accepted and the first to exchange would win the property. Hence we did the paperwork, acted fast and was the first in.
      But they lied and wanted another bidding war to occur.
      They used us to get higher offers. And outright lied.

      • [Deactivated] on 10/02/2016 - 11:03
        +5

        if an agents mouth is open, they're lying

      • kingmw on 11/02/2016 - 09:04

        Did they write this down, confirm on email etc or just verbally?

  • Donaldhump on 10/02/2016 - 00:35

    wait for interest rates to go up, people will drop like flies… when that is who knows, but i got a feeling from what i read banks are already starting to increase rates due to tighter rules for d=lending money.

    i have been trying for a bit and just given up. i went and looked at a properties that has 40+ parties, i just drive away… i do hope one day it will settle. I don't see how it is sustainable, esp sydney and melbourne

    • congo on 10/02/2016 - 06:51
      +3

      We don't know when it will become a buyers market again.
      If we wait too long, prices would become out of our reach and impossible for us to afford. We are assuming that Sydney city prices will remain steady and should increase rather than decrease overtime.

      • Donaldhump on 10/02/2016 - 08:22

        thats how people in ireland felt too.

        • tomleonhart on 10/02/2016 - 10:52

          I hope the crash will come soon enough !

          • Homr on 15/03/2024 - 22:52

            @tomleonhart: I'm a victim of gazumping today hence why I'm reading this thread, terrible experience and I'm almost in tears.

            I can tell you now 8years later, the crash didn't come :(

        • Donaldhump on 10/02/2016 - 10:58

          @tomleonhart: me too, to some degree

        • congo on 10/02/2016 - 14:55

          @tomleonhart: I don't think that it would happen

        • tomleonhart on 10/02/2016 - 15:05

          @congngo: We will never know!

          You might complain about Gazumping right now. Wait until you become the seller :)

  • StewBalls on 10/02/2016 - 10:02
    +7

    Is there a place where we can name and shame agencies that regularly conducted these practices?

    There is already a full list of these in the Yellow Pages… :/

  • [Deactivated] on 12/02/2016 - 11:52

    If only we can get refunds for reports. A lot of real estate agents forward us companies who will provide this cheaper for us.. They want lots of people to do this, most likely because they are have deals with them to earn commission.

  • echelon6 on 18/03/2024 - 00:30
    +1

    Every sale is an auction, whether marketed as one or not. Every offer will be shopped around to all other interested buyers before being accepted. There is no such thing as BIN in property sales.

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