Gazumping And Solicitors
Sir, - Much space is devoted in print and in other media in recent times to the problem of gazumping, the unscrupulous practice of jacking up property prices after an agreement is reached with a buyer. I submit that the real cause of gazumping is the unacceptable delay in completing conveyances, thereby protracting the "trading period" within which manipulation can occur. This is not to excuse those auctioneers and vendors who all too readily take advantage of the opportunity presented to them, which is now accentuated in the bull market we presently enjoy.
Solicitors insist on lecturing clients and auctioneers that a "contract is denied" until formal contracts are signed by both buyer and seller and the full deposit paid, whereas most reasonable people would hold the view that once a booking deposit is paid to the selling agent and correctly receipted, making due reference to the property, the parties to the sale, the price agreed and any particulars of sale - e.g., subject to mortgage, closing date, items included in sale etc. - the essential elements of a contract exist at this stage. It is of course true that a sale can fall through if the essential elements of the agreement are not fulfilled. However, it is fundamentally wrong to cast aside a willing and capable buyer who has handed over a booking deposit in good faith after his or her bid is accepted on the excuse that contracts are not yet signed by the vendor.
It is not unusual for solicitors to issue contracts many weeks after a sale is reported in writing by an auctioneer, even in cases where the vendor has requested his/her solicitor to take up the deeds from his/her bank or building society. Frequently a vendor's solicitor will withhold a contract in cases where the purchaser has applied for a local authority loan. The vendor's solicitor's attitude is that his/her client should be free to sell to someone else who can complete in a shorter time. What chance has a buyer in such circumstances? Add to this the fact that local authorities will make approximately £100,000 available to a typical applicant, a fact not lost on vendors' auctioneers specialising in small house sales in low-cost locations or on their solicitors, resulting in second-hand properties, frequently in poor condition, coming onto the market with a cynical asking price "in excess of £90,000".
The unsuspecting potential purchaser is then suckered into what in effect becomes a Dutch auction, resulting in the inevitable £100,000 sale. I believe it is mistaken to blame local authorities for this sham, as it is not they who are manipulating the system. In fact, without the local authorities' loan scheme many a first-time buyer would never own their own home.
It is not just in the emotive cases of first-time buyers that gazumping is in evidence. It is a problem across the spectrum which will continue to flourish for as long as "contracts are denied" and conveyances continue to take a typical eight weeks to complete. No doubt my legal friends will blame the system. I put it to them: who runs the system? - Yours, etc., Kevin Fox, MIAVI,