Property buyers currently exceed the number of properties on the UK real estate market significantly, which has led to some interesting trends across the nation. With properties viewed an average 14 times each, it is not surprising that the rate of gazumping is on the rise. New research shows rates of 36 percent so far this year, increased substantially from the 13 percent rate in 2015. This growth has climbed in alignment with rising house prices and property demand, and falling levels of stock.
The act of gazumping is when a property vendor has accepted a bid from a potential buyer, but proceeds to acquire a higher bid at a later date and removes the original buyer from the sale, causing them to be ‘gazumped’. Despite the annoyance and disappointment this experience can cause to homebuyers, gazumping is a very legal and evident issue. The best way to avoid the experience is to make speed a priority when purchasing a new home, making the entire process as seamless as possible.
According to Peter Wetherell, CEO of Wetherell, buyers are customarily gazumped when the property in question is prevalent on the market, whether it be due to the pricing of the building, the quality of the features, or the location. The popularity of the property could be due to elements on either end of the scale, either extremely affordable, making it a great starter home, or ultimate luxury, generating a lot of local attention due to the superior features and decor.
The number of new properties entering the market is falling nationwide
Political changes over the last two years have led to an uncertain economic climate in the United Kingdom, which has caused hesitation among property owners when deciding to sell. However, this has not stopped demand growing across the country, resulting in increasing house prices and unavoidable bidding wars.
35 percent of homebuyers in London have been gazumped since 2015, with 16 percent feeling the sting in the South East. Although the South East has lower rates, more than half that in the capital, each of these locations offers the most in-demand properties in the country, with London providing some of the most luxurious homes in the world. The average house value in the UK is currently around £220,000, whereas a buyer would be looking at £315,807 in the South East and up to £481,345 in London.
Gazumping rates are substantially lower in the north of England, at almost a quarter of the top rates in the south. The North West is the third highest area, with nine percent of buyers being outbid, closely pursued by the West Midlands at seven percent, and Yorkshire with six percent of consumers losing out to a higher bidder. Property prices in these areas are notably lower than in the south, so fewer bidding conflicts and levels of gazumping are expected.
Scotland closes the data with only one percent of homebuyers having been gazumped since 2015. It is commonly thought to be an illegal act in the most northern part of the UK, but this is untrue. The difference in laws between Scotland and England when it comes to property bids means that when an offer is accepted in writing, in Scotland, it is legally binding. As such, when a seller chooses to accept a higher bid, a solicitor bound by Scottish law would be unable to continue to sell the property due to misconduct, and so the vendor would need to use a solicitor elsewhere. This could result in duplicate fees, additional property surveys, extra paperwork, and time constraints; which is why gazumping rates are so low – the higher offer would need to be abundant to be worthwhile.
These figures clarify that buyers face a greater risk of being outbid on properties in affluent areas with rising demand.
The speed of a sale can decrease chances of being gazumped
In order to avoid the disappointment of losing out on a property due to a better offer coming along and having to start from square one with the property search, there are some considerations buyers can bear in mind. The most important element is the speed of the sale. If a buyer can offer the vendor cash, then the transaction will be closed much sooner than if the purchaser requires a mortgage. However, in most instances, especially in expensive areas, a mortgage will be necessary. In this case, the purchaser should have a mortgage in principle, where they can confidently make a bid on a property knowing they can almost certainly receive the funds. Getting to this point also means that there is only the application to complete following the offer being accepted and this should be completed as quickly as possible.
If there are any other properties in the situation, these should also be thought about when making an offer. Long chains could lead to the loss of a property as the vendor may be unwilling to wait for the buyer’s property to sell.
A more personal point to entertain is the idea of people buying into people. Do not miscalculate the amount someone can be connected to their home. Building a rapport with the seller of your desired property can definitely earn you bonus points if they see you and your family will care for the property and love it. If multiple bids are around the same range, the buyer may not necessarily take the highest offer.
Lastly, a realistic offer will be crucial in high demand locations. Even if an offer is accepted, if it is too low, then the chances of someone coming along with a higher offer are almost inevitable, and they may still take away a great deal. It is always important to play fair in real estate, especially if you’ve found a property with some real buzz around it.
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