How to avoid being gazumped when you buy a property

There is little more frustrating than planning to buy your dream home then losing it at the last moment when a new buyer comes along with a better offer. This is gazumping and as well as being upsetting, it can be expensive. You may already have paid for searches, a survey, conveyancing costs and a substantial mortgage arrangement fee, only to end up having to start all over again.

Gazumping is perfectly legal and unfortunately it can happen repeatedly to buyers, particularly in areas where there is limited housing stock available to purchase.

The advantages of an exclusivity agreement

The best way to deter your seller from finding a new buyer willing to pay more for the property is by asking them to enter into an exclusivity or lock-in agreement.

This is a legally binding agreement committing you to buy the property at the agreed price. In return, the seller will not consider any other offers for the property or negotiate with other potential buyers.

It is also beneficial when selling a property, preventing buyers dropping out without good cause or trying to renegotiate the price downwards at the last moment.

What conditions does an exclusivity agreement contain?

Both the seller and the buyer would normally agree to pay a fixed sum of money if either party breaches the terms of the exclusivity agreement. This means that as well as the seller being bound to sell you the property, you are also bound to buy it. If either of you pulls out of the transaction, the agreed sum would be paid to the other party. It does not mean that the seller is obliged to sell to you, but it does mean that if they do not go ahead, they will have to compensate you.

The document would detail the agreed time period during which the transaction must be completed. This will be long enough to allow for the buyer to arrange for a survey, a mortgage and any other inspections and enquiries that need to be carried out.

It would also list any circumstances under which the agreement could be voided or altered, for example where substantial problems arise on the survey or the searches reveal something adverse.

There will also be a clause requiring both the buyer and seller and their legal representatives to provide information without delay.

In summary

Being gazumped can be expensive as well as frustrating. It can substantially delay any planned move as both the property search and legal transaction have to begin again. By asking for an exclusivity agreement, you can be as sure as possible that the purchase will go ahead. The agreement will also prevent the sellers from trying to raise the price at the last moment to force you into paying more.

Get In Touch Today

At Quinn Legal we help our clients from day one.

If you are buying or selling a property and would like to discuss the option of an exclusivity agreement, please feel free to speak to one of our expert property team on 01624 665522 or emailing us and find out how we can make your life easier.

Alternatively, you can Make An Online Enquiry and one of our team will be in touch with you as soon as possible.

 

Thanks again for all the help and going above and beyond. It is very much appreciated.