Posted on: 24 July 2020
Getting gazumped is, without doubt, one of the biggest challenges you may face during the conveyancing process. It may seem like your deal is as good as done once you complete the inspections and even pay the deposit, but that's not the case.
Here is a highlight of what you should know about gazumping and how you can ensure you don't find yourself at the losing end of this practice.
It Can Only Happen Before Exchange
In the conveyancing process, only the exchange of contracts with the seller or any party acting on their behalf places them under a legal obligation to sell you the property. At this stage, the seller is free to negotiate and even accept offers from other potential buyers.
It Is Not Illegal
It can be a real disappointment to lose on the property you had set your sights on, knowing that another buyer is getting it. You are probably thinking about what legal recourse to pursue, but the truth is that there is none.
Gazumping is not illegal and is actually quite a common practice across different states in Australia. The ACT is the exception to this as there are anti-gazumping laws enforced in the territory. As mentioned, you will only have grounds to challenge the sale of a property to another seller if you and the seller have already exchanged contracts.
It's Not Always About the Money
A seller may pass on your offer in favour of another buyer's offer because the said buyer is offering a higher price. Besides looking at the value of the offer, the seller may, at their discretion, consider other factors when accepting offers.
Delays with your mortgage application, for example, will only delay the conveyancing process. For this reason, the seller may choose to go with another offer, even if the price is lower if only to close the sale faster.
You Can Reduce the Risk
Hiring a conveyancing solicitor is always worth the money you will spend. Your solicitor can advise you accordingly and collaborate with other experts such as surveyors to ensure that the necessary checks are taken care of as soon as possible. You should also obtain a mortgage in principle. Prepare well, and there won't be as big an opportunity for the seller to gazump you out of that property you want to buy.
Gazumping can happen to anyone. It helps to understand what this potential obstacle to conveyancing is and how you can avoid getting gazumped.Share