Sometimes strong competition for a particular property can leave buyers at risk of wasting time and money in a property purchase, only to find that the seller later accepts a higher offer from a third party and pulls out of the original deal.
This is commonly referred to as "gazumping". Whatever the arguments for or against it, it is perfectly legal as in England sellers are not required to proceed with a sale until the moment that formal contracts are exchanged, usually 14-28 days after terms have first been agreed.
Sellers can of course take the view that buyers also withdraw from deals once sellers have incurred costs, and so they should have the same flexibility. Furthermore, if there is a higher bid for the property, why should they be obliged to sell to someone who could himself sell on the property for that higher price, making an immediate profit out of a property he did not yet own?
These arguments can run and run, but gazumping is still a risk, and buyers sometimes seek to protect their position by entering into a lock-out agreement with their seller at the start of a transaction, prior to spending any money on surveys, valuations and searches.
Under such an agreement the seller usually agrees not to accept any higher bids for the property for a certain period, so as to give the buyer time to put himself in a position to exchange. However, if the buyer is not prepared to commit himself to purchase at that point in time, the seller will still insist on the right to decide not to sell at all, particularly if the buyer’s survey reveals something which might justify a price reduction. So ultimately these agreements have only limited value. It can be better simply to make your offer the best offer and proceed with all haste.
Whether or not a lock-out agreement has been entered into, estate agents are obliged to pass on to their clients details of all offers received. So don’t blame them; it is always the seller’s decision.
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