How to avoid getting gazumped
Having an offer accepted on your first house is exciting, but it’s too early to be popping the champagne.
Buying a house doesn’t become official until the contracts have been exchanged, making the agreement legally binding. Until then, it’s possible – when buying a property by private treaty – your home could be sold to someone else.
When a vendor accepts a verbal offer from a buyer but sells the property to someone else, this is called gazumping and yes, it’s completely legal.
So, how do you avoid getting gazumped?
When a property is sold by private treaty, the buyer has a five-day cooling-off period after the contracts have exchanged. This ends at the close of business on the fifth working day. This means an exchange can happen quickly and the buyer still has time to order their strata, pest and building reports. The downside for the vendor is the buyer can pull out of the sale. Choosing to withdraw an offer, means the buyer will lose 0.25% of the deposit.
In the current market, it’s common for many parties to be interested in one property. To make yourself more attractive to a vendor, you can waive the cooling off period. This is done with a 66W Certificate, which is signed by your Solicitor or Conveyancer. Waiving the cooling off period, however, means you’ll need to move quickly.
This includes having your Lawyer or Conveyancer look over the contract and checking for any defects with the property before exchanging. If you take too long, the vendor may sell the property to someone else.
In a nutshell, the more organised you are, the quicker you’ll be able to exchange contracts and ultimately have less chance of being gazumped.
Still not sure?
It’s the job of a Buyer’s Agent to help minimise the risk of being gazumped, as well as saving you time, money and stress. To ensure this doesn’t happen to you speak to one of our Buyer’s Agents. Alternatively, there are also short courses available to help get your head around buying your first house.
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