Top tricks to watch out for in a seller’s market
Graham Farthing, Partner at Austin Gray, explores the most common reasons why a seller may pull out of an agreement and highlights the buyer’s choices if this happens
The latest set of housing policies are primarily focused on getting more Britons on the property ladder, but as we see the property market starting to pick up again, many buyers can feel anxious about being in a seller’s market.
Before a deal is sealed there are many reasons why a seller may choose not to complete on a sale. Some of these reasons can be traced back to the health of the specific local property market and potential changes that could affect price and demand.
In this expert blog, Mr Farthing explores the most common reasons for a seller to pull out of an agreement to sell their home, and the practical steps that buyers can choose to take.
Gazumping has declined across England and Wales, however, it is still a common issue that affects buyers in property hotspots, in up-and-coming areas and during times of heightened demand. For example, Brighton and London were gazumping capitals during 2014 due to property price increases that far outstripped predictions.
Gazumping occurs when a potential buyer has been outbid by another interested party, after their original offer was already accepted by the seller. The practice is questionable but legal in England and Wales – Scottish law does differ – however, if you have entered into a contract which states that the seller will not accept other offers during a set period, you can sue the seller for breach of contract.
Continuous involvement in gazumped deals can damage an agent’s reputation in the long-term, so it is in the agent’s best interest to prevent it from occurring. However, the best thing a buyer can do to avoid the situation is to prepare beforehand:
– Go in with a fair offer that is in line with the asking price and market conditions, unless other factors come into play – for example, damage to the property, a short lease or if the area is in need of regeneration
– Have your mortgage in place, and a solicitor to carry out the necessary checks to speed up the process
– Make sure that the property is withdrawn from the market after your offer has been accepted – typically four to six weeks after.
The seller may wish to withdraw from a transaction at any time before exchange of contracts. Common reasons for doing this include another buyer putting in a higher bid, keeping hold of the asset during a period of price growth, or waiting to sell due to other market conditions and policies. The buyer does not have any rights to claim the property as their own before contracts are exchanged. You can ask the seller to contribute towards any costs such as legal fees that you have incurred during the process but the seller is not under any obligation to to do this.
Unless you buy a new build, a property sale is almost always part of a long chain that is dependent upon the success of linked transactions. This chain can collapse somewhere along the line, and there is little you can do about it. However, you can invest in home buyers protection insurance to safeguard you against financial risks. If you have sold your house and are looking for another home on the market, you should search for temporary accommodation options as soon as possible and consider a bridging loan to maintain your finances for the next sale.
If you have found your dream home, others may feel the same way. If the property is popular, or if the owner would like to sell quickly and a contract race has been started by the seller, your initial offer may be rejected. The seller or an assigned solicitor should inform all parties involved of the situation, either in writing or over the phone. If the seller does not treat every prospective buyer equally, or the same solicitor is used by the seller and buyer, then both of these scenarios are unlawful. The latter is a conflict of interest, so you may be entitled to challenge the motive and decision of the seller.
Finally, if the seller pulls out of a sale due to unlawful discrimination – basing a decision on race, religion, sex, sexual orientation, disability or gender – you can contact the Citizens Advice Bureau or seek legal aid.
Click here to view OnTheMarket.com’s blog on ‘What to do when you’ve found a dream home and your buyer walks away.’
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