In the world of property transactions, few things put such a bitter taste in one’s mouth than the act of ‘gazumping’. According to The Cambridge Dictionary, to gazump is to ‘refuse to sell a house that you own to someone you have agreed to sell it to, and to sell it instead to someone who offers to pay more for it’. According to the Urban Dictionary, well, it’s probably not appropriate to share.
No situation is black and white, but most would agree that, setting aside the emotional investment, having spent thousands of pounds on legal fees and surveys, it is fair that any buyer losing out on a property in this way has a right to feel just a little hard done by.
But if so terrible, why is it so commonplace?
My experience as an estate agent in London for a number of years has led me to believe that the answer is multifaceted. Whilst I am certain most sellers would like to believe they would keep a gentleman’s agreement, when an offer stares them in the face that knocks the socks off the previous, and is likely to improve their financial situation dramatically, then who could really blame them when the estate agent has clearly undervalued their property in the first place? It’s human nature, to a point, and as much as they love the idea of Mr and Mrs Roberts bringing up their family in the house, Mr and Mrs Jones will, I’m sure, make it a wonderful buy to let.
Satire aside, tens of thousands of pounds are often at play when a seller is willing to accept a higher offer after the process is already in motion with another buyer. It is a serious decision, and one that few sellers take lightly. Is a bird in the hand worth two in the bush? How pertinent.
The longer the transaction process the more opportunity it gives for an eager buyer to pull the rug from under the current buyers’ feet. The buyer has spent weeks, months, sometimes years trying to find the perfect property, and in taking their eye off the prize for just a moment, they have lost something so important to them which is still not legally sold to anyone else, and it’s been weeks since it went under offer. Tempting isn’t it?
Gazumping in Scotland
I sadly suspect that whilst the English property system stays as it is, there is always going to be gazumping from someone, somewhere. Having bought property in both England and Scotland, I can say with no bias whatsoever that the system in Scotland simply does not tolerate gazumping, and thus the appetite for it is minimal.
There are several reasons that can be attributed to this anti-gazumping culture. It might be news to some that the vast majority of estate agents in Scotland are in fact also solicitors and are governed under the Law Society. The Law Society has its own strict regulations, one of which states that acting in a gazumping situation is a disciplinary offence. Therefore, most agents/solicitors acting for a seller who wishes to accept another offer during the transaction process, will have to withdraw from their duties to the client.
The client could, of course, always jump ship and choose another solicitor, because gazumping is not illegal in Scotland. Likewise, there are more and more independent estate agents establishing themselves in Scotland who are not solicitors.
With an increasing number of these less regulated agents managing property transactions, as well as the opportunity for a seller to turn to a different solicitor, why is gazumping still such a rare beast north of the border today?
Process of buying a property in Scotland
Fundamentally, whilst the property system in Scotland can seem brutal in the first stages, with blind bidding and rare opportunities to negotiate, once an offer is accepted the conclusion of missives, where the contract is legally binding, can happen surprisingly quickly with a much shorter average time than the exchange of contracts takes in England.
There are many reasons for this, an important one being that the buyer has already seen the home report, knows the basic faults with the property, and has offered accordingly. This cannot be said for the English system where an offer is put forward, surveys are then instructed and the offer is then renegotiated accordingly, all of which can take several weeks.
It is not often that sellers want to jump ship to another solicitor. Not only would they incur additional fees, but many solicitors may choose not to act on the basis of the gazumping. Likewise, the seller must weigh up the benefits of starting the process again which is dependant on how long the transaction has been progressing for.
The long and the short of it is that gazumping in Scotland, whilst entirely possible, presents sellers not only with many more hurdles, both ethical and practical, to jump over, but a property culture where it is, quite simply, ‘not done’.
For guidelines on the Scottish system, see our dedicated page: Buying a Property in Scotland. If you’d like to discuss your property search with us please contact us.