There has been a significant increase in gazumping rates in the UK over the last two years, recent findings show. As average market values rise, the levels of demand and resulting bidding wars have also increased, with gazumping rates at 36 percent this year, from almost a third of that in 2015 at 13 percent.
The term gazumping refers to the act of a property purchaser having had their previously accepted bid knocked out of play from a higher bidder. When the seller approves the higher value, the original buyer is gazumped from the sale.
Mayfair Guru, Peter Wetherell, explains that the very frustrating, but legal aspect of the property market in the UK happens most often on properties with the highest levels of demand. The properties can be sought after for their exceptional quality, affordable price, or convenient location, meaning they could be either end of the scale, from cheap but well-situated starter home or student pad to the utmost luxury, either of which people are willing to pay more money for to secure the sale.
The only sure way to avoid being gazumped is to ensure all elements of the sale are completed in an orderly and speedy fashion.
LONDON HAS THE HIGHEST RATES OF GAZUMPING
The past two years have seen a cloud of uncertainty lingering over the nation from a political and economic viewpoint. Although house prices and demand for new properties have been increasing, hesitation among vendors has seen fewer and fewer homes entering the real estate market, leading to a falling number of transactions.
The data outlining gazumping rates around the country revealed London to be the worst hit. 35 percent of property buyers in the capital have been knocked out of a sale due to a higher bid being accepted since 2015. This rate is more than double that seen in the South East, which has the second highest rate at 16 percent. It is not unexpected that these two locations are at the top of the list, with some of the most luxurious properties in the UK gracing the streets here. Currently, the average property value in London is £481,345 and in the South East is £315,807, both of which are notably greater than the £220,084 national average.
At almost half again, the North West has the third highest rates, at nine percent, with the West Midland and Yorkshire following closely at seven and six percent, respectively. The average market values are significantly lower in each of these regions compared to the south.
Scotland is at the bottom of the list. Commonly thought to be illegal in this country, gazumping rates since 2015 are only one percent here. It is in fact still a legal act in Scotland, yet the law does prohibit solicitors acting on behalf of the vendor if they choose to accept a higher offer after already accepting a lower bid. The seller would need to find a new solicitor bound by the law in England & Wales, and this could cause significant delays, duplicate fees, and inconvenience due to location and lack of face to face paperwork completion. In this instance, the higher bid would need to be substantial for a vendor to gazump a buyer from their sale, hence the exceptionally low rate in Scotland.
The figures highlight that gazumping most definitely affects cities with higher property values and levels of demand. These areas are where people are more likely to fight for their ideal property and put in top offers to push someone else off the ladder and secure their new home.
AS A HOMEBUYER, YOU CAN REDUCE THE RISK OF BEING GAZUMPED
Buying in cash will almost always guarantee a quick sale and minimise most risks of being outbid. However, the majority of purchasers require a mortgage, and so the best approach is to obtain a mortgage in principle before making an offer on a property. Upon receiving a go-ahead, the mortgage application should be completed as soon as possible to avoid any delays and close the gap between offer and sale close as this entire period is at risk of a higher bidder coming along.
In addition to fast paperwork completion, additional properties should also be considered. If the buyer has a property to sell and experiences delays on that side, this opens the gap for others to swoop in and so property chains should be avoided at all costs. Always make sure everything is good to go on the property and expect everything to move quickly once an offer has been made and accepted.
Not to be underestimated, the final point to consider is the relationship built between vendor and consumer. The person selling the property is likely to feel quite attached to it, they have memories and sentimental value within their home, and so a good rapport with this person can do wonders. Some vendors have been known to accept a slightly lower offer if they feel the home will go to a family who will care for and live in the house as well as they have previously done.