REAL ESTATE ABROAD : Gazumping: When a Deal Is Not a Deal : British Manner of Buying Real Estate Can Be Challenge
Beware of the sting of the gazumper .
This is good advice to the would-be property owner in the United Kingdom.
Gazumping, or raising the price after buyer and seller have agreed upon a deal, even after deposit money may have changed hands, is a hazardous fact of life, one of several which make home buying a heady experience for foreigners.
Still, Americans do buy British property successfully. Some purchase second/vacation homes with “character,” some need a home during a lengthy job assignments, and others live the expatriate life.
As my wife and I learned, almost all home-buying experience gained in the United States should be tossed out.
No Sewing Up a Deal
First, abandon all the terminology you’ve acquired. Out go realtors, escrow, title insurance for starters. Toss out much face-to-face negotiating; toss out having to fathom and sign lots of documents.
Above all, jettison the notion that you can sew up a deal at the beginning of the 60 to 90 days you hope it’ll take to move into your dream house.
Actually, you start out the way you do in the U.S., narrowing to the appropriate area and making sure you can afford the homes there.
But as soon as you contact an estate agent , things will change.
Estate agents aren’t the same as realtors; they do far less (and collect a lower fee, usually less than 3%, from the seller). But you still need them--even if you never see them.
Whether from advertising, strolling past a property or reading a flyer, you’ve spotted a likely looking house. You contact the agent and receive an appointment with the seller (or vendor here). The agent isn’t there to give you a hard or soft sell. You get there on your own. You get as many such appointments as you need; you’re still on your own.
You Want to Bargain
So you’ve found the house. The agent’s written prospectus has encouraged offers “in the vicinity of 49,000 (about $73,000). Now you want to bargain. Because of the gazumping and because of tradition, offering very low is inadvisable.
You decide upon 48,000. The estate agent confers with the vendor. The sale is “agreed, subject to contract.” Those words speak volumes.
Even if you have handed over a “good faith” deposit of a thousand pounds or so, the vendor can still accept a higher offer; the estate agent won’t even take the “For Sale” sign down. The agent instead inquires about your solicitor’s name.
A solicitor is a category of lawyer, and here you need one to handle things that an American escrow holder will handle, as well as simply protecting your interests in the maze of British law and precedent.
Fills Crucial Role
Your solicitor asks whether you have engaged a surveyor. Unless you have chosen a brand-new, unlived-in house, this professional appraiser/structural engineer will have crucial impact upon your purchase.
If you buy “character,” you probably buy age, and in this damp climate age means probably buying wet and dry rot, crumbling plaster and mortar, rising dampness and wood-worm infestations. Your surveyor should spot all these defects. If you have engaged a banker (for a loan), your banker will also need a survey.
The surveyor (who may also be only a telephone voice--as ours was) formally states that it will take--in your case--2,000 in repairs. We decided to reduce our offer by 1,000.
Our solicitor conferred with the vendor’s solicitor and the reduction was agreed. But it was still too early to pop corks.
You have not yet exchanged contracts, and you won’t, since you have wised up to the system a bit. At this point, you put up 10% of the total price and tell your solicitor to get on with the search and the enquiries .
No Title Companies
There are no title insurance companies in the U.K., possibly the British are too sane to guarantee titles when the house might have been occupied, deedless, by the same family for 700 years.
But some ownership, planning and encumbrance records exist, and your solicitor now haunts government offices and writes long letters to the other solicitor.
The enquiries clear up whether anyone’s bothered to lay a gas line to your property, whether your neighbors have claimed Ancient Light (20 years of uninterrupted sunlight, stopping you from cutting it off) or who owns the barrier (fence) on your back garden’s north.
While search and enquiries pend, you stew. You are at your most vulnerable gazumping time.
You Put Up the Money
Finally, you hear from the solicitor, and you appear in his office. You put up your money. The solicitors telephone each other and you finally sign a document, agreeing to the terms.
All that remains are completion and possession , and they should now follow as the night the day, and within 28 days. But they don’t always. Your deed and title will be registered. At last, you will own a piece of the Sceptred Isle.
We were lucky. Our deal wasn’t complicated by chaining, and the majority of U.K. deals are. We didn’t have to sell our old house in order to exchange contracts, and the vendor didn’t have to buy a new place in order to do the same. Chaining can extend the process by months and months, gazumpings and gazumpings.