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A few days ago the letter below was published in the Daily Mail:

How to ensure you never get gazumped

My solution to gazumping is simple. When an offer is made to buy your property, you first sell an option to buy.

For a specified sum, say £5,000.00, the buyer has the right for a set time to buy your home at the price agreed, with that sum taken off the final calculation. The property is then taken off the market with no further viewings. If the buyer backs out, they forfeit the £5,000.00.

A similar arrangement can be made with a potential seller by setting a £5,000.00 right to sell at the agreed price within the same timeframe. If the seller backs out, the £5,000.00 is handed over.

The option is created after having had the survey etc done in the normal way, so the procedure is as it would have ordinarily been, subject to contract and survey.

The only change is that, after they're satisfied everything is in order, each side is committed: money is at stake rather than verbal niceties, which can change at the flick of a property page.

It can also stop new prices being introduced as a ruse to increase or decrease previously agreed sums. I discovered that far too many people simply didn't want to commit themselves. Too bad.

If someone seriously wants to buy and is truly in a position to proceed, rather than simply saying they are, they would take the option because there's nothing to lose but everything to gain.

There's nothing as silly as withdrawing a property from the market because of accepting an offer. An offer is only as good as its back-up and my form of back-up is the option to buy. No option, no seriousness. Next, please.

All money is held in escrow by solicitors. But be wary. On one deal I experienced, the buyers wanted to back out and phoned up pretending to be another person offering considerably more. Had they come to view, I would have breached the agreement and the trickster buyer could have pulled out without penalty.

So take it or leave it, with reliance on your solicitor/conveyancer, as always, of course. If either side drops out, fine, but at least the injured party is £5,000.00 richer.

This all seems good in principle but, if the option is taken after the survey has been carried out (and one assumes that this means that a mortgage offer has been issued), most transactions will have had search results back, enquiries raised and documents signed - why not just go to exchange of contracts

This, with most transactions being in a chain, is what would have to happen with the option as everyone in the chain would have to agree to enter into the option because most purchases are dependent upon a related sale. This could be another unnecessary step in the conveyancing process.

I have received a number of comments from my Bold Legal Group members, including:

This seems similar to the Scottish system. The problem is that if your circumstances change (e.g. you lose your job), you are up the creek without a paddle.

On the 12th February I will be paying a visit to one of my member firms in Scotland in order to gain a better understanding of the Scottish System'.

I will report back in due course. In the meantime, I would be very interested to hear the estate agents' view

*Rob Hailstone is Founder of the Bold Legal Group

rh@boldgroup.co.uk www.boldgroup.co.uk


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    I'm sorry, I must have missed something...
    What, precisely, does Robert (the man despised being called 'Rabbie') Burns have to do with this Surely we're beyond the mindset of whisky, haggis, bagpipes and other limp generalisations clumsily hinting toward something north of our common border.

    • 21 January 2015 14:27 PM
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