Property Blog: Impatient sellers spooking buyers with ‘Ghost Gazumping’
Published: 01/04/2014
After searching high and low you finally find your dream new home. You agree a price and everything is moving along nicely. Then just before you exchange the seller ups the ante and demands more money. Lynne McCaffrey discusses the worrying new conveyancing trend which is putting many property sales in jeopardy:
“So the past few years sellers have bore the brunt of a waning property market. Declining house prices pushed many of them into negative equity while others saw the months pass by without a flicker of interest. However with there being 12 buyers for every property – the highest level since 2008 - we are starting to see the tables turn in the seller’s favour and them use it to their advantage.
“Gazumping has always played a part buying property. However with property prices rising fast we are starting to see a new variation.
“Ghost gazumping is where the seller ups the price without there even being another rival bid. It sounds a risky, if not somewhat greedy, strategy but with demand outstripping supply and property’s accumulating value on a monthly basis, it’s a move that seems to be paying off – literally.
“This tactic is perfectly legal; sellers can change the asking price right up until contracts have been exchanged and, unfortunately, there is little a buyer can do about it other than agree to it or back out of the purchase.
“There are however ways to potentially avoid such a situation. It largely boils down to speed, to make sure the property has not accrued adequate value to warrant such a move by the seller.
“One way to achieve this is to use a solicitor who has the Law Society’s Conveyancing Quality Scheme accreditation. If they aren’t CQS accredited there is a good chance they won’t be on the lender’s panel. This means they will have to appoint a firm who is which will not only cost you money but will also cause delays and potentially put your purchase at risk.
“However with the Mortgage Market Review (MMR) set for implementation this month I wonder if this impatience could end up with sellers shooting themselves in the foot.
“From what we’re already experiencing lenders are being much more methodical (translate that as you will) during the mortgage application process. In one case a client was subjected to over three hours of questioning by the lender. And that was for a remortgage… with their existing lender so goodness know what will buyers will faces with a lender they have no proven track record with.
“Add to this a sharp decline in mortgage approvals – 70,309 in February vs. 76,753 in January, I fear the expectation of fast offers will soon be a thing of the past and unless the vendor is selling to a cash buyer then they are going to have to accept the old adage – good things come to those who wait.”
Content correct at time of publication