Why does gazumping happen?
Gazumping happens because property agreements in NSW aren’t legally binding until contracts are signed and exchanged.
Sellers may feel compelled to accept higher offers due to market pressures, last-minute bids or advice from agents acting in their best interest, making verbal agreements unreliable.
It is worth noting that they may also choose to accept another offer of the same price but with more favourable terms such as quicker settlements and waiving the cooling-off period.
Is gazumping legal in NSW?
Gazumping is legal in NSW. A property sale becomes legally binding only when both the buyer and seller have signed and exchanged contracts. Until this exchange occurs, the seller can accept other offers without legal obligation to the initial buyer.
Is gazumping common?
Gazumping is more common in areas where there is intense competition for properties such as near sought-after schools, close to public transport or high-density residential areas.
It is in the purchaser’s best interest to get the contract reviewed by their property lawyer or conveyancer before making a formal offer.
Once your offer is accepted, it is advisable to sign the contract promptly to secure the property and ensure it is taken off the market.
Some agents may recommend signing the contract with a Section 66W certificate waiving off the cooling period and paying the 10% deposit immediately upon offer acceptance to avoid this issue. This may not be the right approach for everyone, which is why an experienced property lawyer can guide and protect your interests as a buyer.
Can I get a refund on my Expression of Interest (EOI) payment if I have been gazumped?
If you’ve been gazumped, it’s important to understand that you have limited recourse. Neither the agent nor the seller is obliged to compensate you for any expenses incurred, such as legal fees or inspection costs.
If you’ve paid a holding deposit or EOI payment, you may be able to request a refund, which is covered in the NSW Fairtrading gazumping page. Contact the real estate agent or seller promptly, providing proof of payment and requesting the refund in writing to ensure a record of your request. If the refund is refused, talk to your property lawyer who will assist you with the next course of action.
Keep records of costs already incurred, such as legal or inspection fees; however, note that these are usually not recoverable. This just ensures you have clear records of all expenses incurred throughout the property transaction process.
How can you protect yourself from gazumping?
One way to protect yourself is to get the contract of sale from the agent early so your property lawyer can review it for any issues. Understanding the terms and addressing any concerns quickly helps avoid unnecessary hold-ups.
The cost of professional conveyancing is well worth considering the legal protection, risk mitigation and expert guidance it provides. It facilitates a smooth transaction and safeguards from issues like gazumping and contract complexities.
You’ll also want to ensure finance is pre-approved so you can pay the deposit immediately upon exchange to take the property off the market. Having your finances ready ensures no delays that could give another buyer an advantage.
Aim to exchange contracts swiftly to make the agreement legally binding and avoid unnecessary delays where the seller is free to consider other offers.
Can you be gazumped during the cooling-off period?
As a buyer in NSW, you have a five-business-day cooling-off period after exchanging contracts. During this period, you can withdraw from the purchase and forfeit 0.25% of the purchase price to the vendor.
It is important to note here that the cooling-off period is the right of the buyer. A seller cannot withdraw from the sale at this time. This effectively means, gazumping cannot occur during the cooling-off period.
Gazumping can only occur between a verbally accepted offer and the formal exchange of signed contracts by both parties.
Until contracts are exchanged and become legally binding, the seller can accept other offers, and you have limited rights if gazumped.
Buyers can protect themselves from gazumping by taking proactive steps, such as arranging finances and swiftly exchanging contracts.
Get time-critical legal advice and conveyancing with RS Law Group
Gazumping can add stress and uncertainty to an already complex property transaction. Understanding your rights and taking proactive measures is crucial, but having the right legal support can make all the difference.
At RS Law Group, we specialise in the legal aspects of property transactions, ensuring your interests are protected every step.
Whether you’re buying, selling, or managing unexpected hurdles, our experienced team is here to provide clear, practical advice and a seamless process.
Don’t let the challenges of gazumping derail your property journey. Contact us today to safeguard your investment and achieve the best possible outcome.
