An end to Gazumping?

Written by
Michael Robinson
October 27, 2017

The Government has recently announced a review aimed at making home buying faster and less stressful. They asked estate agencies, conveyancing companies, mortgage advisors and others in the sector for feedback on the property buying process. This is in an attempt to make the process of buying property less prone to so called ‘gazumping’ which leaves many sellers high and dry each year when a higher offer is accepted at the last minute. The review is aiming to suggest ways of making the process less stressful and quicker.

At Zoom995, we fully support the review and placing customers first. The event of a higher buyer being able to ‘gazump’ is something that we actively try to avoid. We have a system where we try to create goodwill between the buyer and the seller by charging a small fee once the offer on the property has been accepted, subject to contract. It is not a guarantee but by having even a nominal amount invested helps both parties to do their best to proceed and demonstrates a level of commitment. Zoom995 currently has the best sales ratio of any competing standard agents in the area so this is perhaps something that the wider sector should try.

The current legal framework means that we are obliged to put forward any offer that we receive right up until exchange. An agreement to take the property off the market when the seller is happy is just that, an agreement; it is not legally binding. Breaking an agreement is simply not ethical and leads to bad feeling but it is agreed.

We feel strongly as we believe that it negatively affects the reputation of the agent when it is outside of their control. There is also no financial incentive as agents like Zoom995 charge a low fee whatever the final price of the house. A more traditional agent, which charges a percentage of the final house price, will therefore receive more money for a larger price and will therefore be more inclined to drive up their commission.

With the rise in fixed price online estate agents, we hope that agents will become supportive of such a move towards eliminating gazumping. Another possible move may be to follow the Scottish model of sealed bids and a firm deadline with a reserve price set by the seller. This is highly respected by many people. We often hear people question why this system has not been adopted in England. It would certainly be a fairer system in more saturated and competitive areas of the UK such as the southeast where Zoom995 predominantly operates. The review also seeks to make the whole process of buying a property quicker and leaner. Again, this is something that we completely support. Buying a property is still the largest purchase that most of us make in our lives but that does not mean that is has to be complicated or stressful.

The online agent model has proved that the sector can be innovated and that there is a strong appetite amongst consumers for new ways of buying and renting. You can instruct an agent online and do all conveyancing via online systems. The old DX system between solicitors, which delayed so many exchanges and completions, now looks outdated in today’s connected world where we are used to having everything immediately. Consumers do not see why things cannot be streamlined. In 5 year’s time 20% of our workforce will be millennials – that is, people that were born after the year 2000. This is a generation used to technology and dismissive of outdated processes. They will be getting on the first rung of the ladder and will expect lean processes regardless of the level of the transaction. Online agents have been quick to see this and there are many others in the process that have also innovated. The question is whether the Government can keep up with a customer centric market and enforce laws that make it fairer for all parties in the process. This review may be the first step; we at Zoom995 hope so.

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