Co-written by Kay Vitogiannis
- What is Gazumping?
- What does it mean for purchasers and how to protect them from being “Gazumped”?
- Is Gazumping legal?
Gazumping is when an offer to purchase is verbally accepted by the agent or vendor although contracts have not been signed yet, then the property is sold to someone else, usually at a higher price.
What does Gazumping mean for purchasers?
Gazumping is something that happens to would-be purchasers when they make an offer to purchase which is verbally accepted by the agent or vendor. The would-be purchaser thinks they have secured the property only to find out later, the property has been sold to someone else, usually at a higher price. Until a deposit is paid, and contracts are signed and exchanged there is no binding agreement.
How do you protect yourself from being Gazumped?
- Make sure you have your loan finance pre-approved before making an offer so that there is no delay once you have found a property.
- Obtain a copy of the contract and provide it to your conveyancer/solicitor immediately.
- Seek an exchange of contracts as soon as possible and pay the 0.25% deposit.
- All residential property purchases have a 5 business day cooling-off period after exchange which gives you time to order any reports required. However, if you rescind during this period you forfeit the deposit.
- Gazumping cannot happen at an auction as contracts are signed immediately and deposit paid.
Is Gazumping legal?
Yes, it is legal. All sales agents have an obligation to present to vendors all offers that are made before contracts are signed and exchanged as well as to act in the best interest of its clients at all times. This obviously includes presenting any higher offers that are made if contracts have not been exchanged, even if they have verbal acceptance of a previous offer. It also has the benefit of possibly increasing any commission an agent is to be paid, thereby further motivating the agent.
Until such time as contracts are signed, exchanged and a deposit paid, the vendor is free to entertain any and all other offers.
Please note the above advice is general only and is specific to the individual contract in question. For further clarification on the above, please feel free to phone me to discuss.
ABOUT CHRISTINE JOHNSEN:
Christine is a licensed conveyancer and Justice of the Peace at Coutts’ Narellan office. She is highly efficient and is able to assist clients with matters concerning; the sale and purchase of residential and commercial property, retirement village contracts, put & call options and family transfers.
For further information please don’t hesitate to contact:
CONTACT COUTTS LAWYERS & CONVEYANCERS TODAY.
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.