Copyright: David Lawson - Property Guide 1997Home page
And there lies the root of the problem. Everyone blames agents: 'But we are in the hands of the seller,' says the veteran who had to tell three unhappy buyers they had been gazumped. He saw the damage done in the last boom and cringes at the return of the practice where a buyer can be left stranded with legal and surveying bills and no property. 'I could be sued if I did not pass on offers to the seller, but I am the one who gets blamed because I have to break the bad news to buyers.'
The problem is not in the shadows but inside us. We are all potential gazumpers. Buyers scream but forget the pain when selling their own property. Who can put their hand on their heart and say they would reject thousands of extra pounds for their home? Nor is gazumping the only flaw in what is already a fraught process. The same veteran - who prefers anonymity rather than admitting a role in gazumping - provides dire examples about when the boot is on the other foot. When Docklands values ground to a halt a few years ago, buyers were in the driving seat. They often cut offers at the last minute, leaving sellers in the lurch.
So what is the solution? The new government is considering making this illegal but the market has enough red tape already and new laws might take years to come into force. An alternative is the system used in Scotland, where sellers ask for sealed bids and the accepted offer is binding on both sides. But this means buyers can pay legal and survey bills for several homes before they win one in this blind auction.
Some agents believe they can help ease the problem without changing the law. 'We don't go around offering property willy-nilly after an offer has been accepted,' says Sarah Shelley of Knight Frank. The main professional groups are trying to make this approach universal through a new code of conduct. Buyers must be told a property is still open to other offers, so at least they then know the deal is conditional. 'We also try to get across to sellers that just because a higher offer comes in, it may not be a better one,' says Shelley. Some owners have lost perfectly good deals because they switched to new buyers who were not able to complete.'
There is nothing to stop buyers and sellers signing agreements, where each commits themselves to the deal. A 'lockout' scheme used by Knight Frank means the seller agrees not to negotiate with other buyers or even advertise the property for a set period - usually 10 days. Buyers commit themselves to try and get the paperwork cleared in that time.And there lies the real reason for the disputes. If buying and selling did not take so long, there would be less opportunity for new offers to come in and buyers top drop out. Knight Frank says sellers can shorten this by preparing the ground. For instance, their solicitor could be working on the draft contract even before a deal is agreed. Buyers can obtain financial references guaranteeing a loan on a suitable property. More speed rather than more rules could be the real solution to killing off the gazumpers.