The journey involved in moving to a new house is not easy. It all starts with financing for the house, which is something that can take years. Then there comes a time when you have to meet the agent or seller of the house to agree on pricing issues. Some sellers stay true to their word about the price but others do not. If a seller hikes the price, then it becomes a little bit harder to buy the house with the money you had budgeted for. And that is what is called gazumping in real estate; it is the situation where a seller refuses to honor your verbal agreement and sells the house to another bidder (usually the highest bidder).
Is Gazumping Legal?
Verbal agreement is not legally binding when it comes to buying a house. And so, gazumping is legal in most Australian states. What is worse, no one is obliged to compensate you for the money you have used in seeking legal advice or the money you have used on inspection reports. If you have been gazumped, you can only take legal action under two conditions. One is if you have already signed the contract, and the other is if you have made an initial payment or deposit. Otherwise, you have no case against the seller.
How Can You Avoid Being Gazumped?
If you haven't made any deposit on the house, then you may not suffer a great financial loss once you have become a victim of gazumping. However, it still doesn't feel right to finance for your dream home for a long time only to be turned down in the final minute. In fact, it is heartbreaking. So what can you do to avoid being gazumped?
There are several things you can do to prevent your seller from ditching you in the last minute. One is to draft an exclusivity or a deposit agreement that prevents the seller from accepting other offers before you have signed the contract. This not only prevent you from succumbing to a great disappointment in the end but it also provides you with a way of holding the seller accountable for his actions. Keep in mind, though, that such moves may come with extra costs. Another move is to act quickly since sellers are not bound by law to sell the house to a specific person; make sure your finances -- particularly the deposit -- are in order before you decide to make your move.
For more information on conveyancing, talk to a professional.
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