Have you spent all your weekends out looking at property to find the one you really like, you put in an offer and are told verbally that it's been accepted but then before you know it the property has been sold to another party for a higher price? You've been gazumped. It's a horrible feeling and a notion that although it's frowned upon, is not actually illegal in NSW. This is because in NSW, as the proverbial saying goes, "it's not over until the fat lady sings" and as NSW Fair Trading states, a home is still for sale until a prospective buyer and vendor have signed their copy of the sale contract and the two parties have "exchanged" these signed contracts, and paid a deposit, which is usually 10% of the purchase price, has been paid. This only occurs during private treaty sales and not auctions (on the day), as auctions are binding sales.
In a market like we are seeing now, with low stock levels across Sydney, and still large numbers of prospective buyers, fears of being gazumped are on the rise due to increased competition. So how do you avoid being gazumped? Here are some of our key tips from our experience over the past 20 years:
- Get all your ducks in a row (ie. from a finance, legal perspective) so that when you find that perfect property, you can move quickly. Speed is critical, and one of the major reasons why buyers miss out and risk getting gazumped. Have your finance preapproved and get the contract to your solicitor/conveyancer asap once you've seen the property to get it reviewed. Be prepared to exchange contracts and pay a deposit quickly.
NB: Signing a cooling-off period will give you time to organise finance, building and pest inspections etc without being gazumped, however you forfeit 0.25% of the purchase price (your initial deposit) to the vendor. In a competitive market, many vendors will not accept an offer of this nature as only the purchase can waive the cooling off period or extend it, which locks the vendor in. - Research the market you are buying in so that you can be confident of putting forward a winning offer, and when you do, make sure that you put the offer in writing as the law requires real estate agents to present all offer to the vendor.
- Negotiate smartly but firmly, and if you are advised that other offers have been made, demand to see written evidence. Be ready to possibly increase your purchase offer to the vendor in this event.
- Know that the vendor can change their mind at any time prior to the exchange of contracts. They may not necessarily sell to the highest offerer, but may accept a lower offer from a prospective buyer if they more favourable conditions/exchange terms.
- Consider using a Buyer's Agent to help you secure the property, as we solely represent you and act on your behalf. PK Property has negotiated over 2500 property purchases for our clients over the past 20 years under all market conditions and with almost every real estate agency in Sydney, and are well placed to help you to navigate the purchasing process.
For a confidential discussion, please call our Buyer's Agents today on (+61) 2 99601066 or enquire today for more information about how PK Property Search & Negotiators can secure your next home for the lowest possible purchase price. Also don't forget to check out our 2 minute video tutorials on our PK TV page and/or subscribe to our Monthly Sydney Property Market Update for Peter's thoughts and comments about what's happening in Sydney's property market, tips and tricks to use and much more!