Phil Spencer - it's time to dump gazumping

You’re probably up to your neck at the start of a busy spring market but I’d hope there’s one thing most of us can agree on very quickly - gazumping is a bad thing.

It is easy for us to agree because agents are the innocent party when gazumping happens. They are obliged by law to put offers to vendors so it is the seller, after all, who makes the decision to go for the bigger bucks should they appear.

But while sellers win out with a bigger payday, others get hurt - financially and personally - when gazumping goes on. I sometimes advocate buyers considering protection insurance to cover survey and legal fees in case they get gazumped, although it’s a condemnation of the current house buying process that this should even be an option.

So it’s little wonder that a recent poll showed that nine per cent of buyers have actually been gazumped and a whopping 85 per cent want it outlawed.

With that weight of opinion, is it enough for us all to shrug our shoulders and say “that’s the way it is” especially in a headstrong market like today’s?

I think the answer is no. We should act.

What agents can do

While agents must by law pass on rival and bigger offers, there are several approaches to the sales process that can reduce the risk of gazumping. They can win agents increased popularity and long-term consumer loyalty in the process.

I’m always telling buyers that they need to be fully prepared (and agents will naturally encourage this) with the standard tick list of work done in advance - the mortgage in principle, have a conveyancer to hand, and be ‘hot to trot’ and become an attractive option for a seller with potential multiple buyers.

Agents could, if their vendor agrees, let any buyer know that if their offer is considered good enough, they could request all further marketing of the property stops.

That’s a big step to take in a busy market, but if it helps guarantee the sale would not become one of the 25 per cent that fall through, why not?

On top of that, and even more fundamentally, agents can help maximise upfront information to buyers in order to reduce the risk of a fall through. And then follow that up by doing everything possible to lock-in an offer once it’s accepted.

At Move iQ we have long banged the drum for both seller and buyer to be as prepared and organised as possible and for homebuyers to get as much up-front information on a property before they submit and offer and incur conveyancing fees. Being organised and ‘proceedable’ will inevitably help to reduce conveyancing time: we all know that the long things take the greater chance they have to fall through.

My Move iQ property reports, powered by Sprift, provide homebuyers with the research and up-front information they need to help them make well informed decisions and helps to reduce this overall time frame.

Creating a climate for a much more ‘stable’ transaction, reduces the risk of minds being changed late in the process when more information comes to hand. With agents backing such initiatives - or other moves within the industry to increase upfront info and possible use of reservation agreements - then the sales process becomes ‘firmer, earlier.’

This would be a major win for consumers, but they are not the only ones to gain.

The benefits for agents

Agents would benefit from a smoother sales process with less uncertainty because a higher proportion of their transactions would survive to completion - when the fees get paid.

Additionally, more upfront information would mean the typical duration of a transaction process - now a painful six months in many cases - would be shortened, so the fees come sooner and the scope for a fall through is lessened again.

Related to all of these, agents would have to spend less time hand-holding buyers and sellers after the offer stage, because greater certainty would be built into the process. The consequence would be that agents could dedicate more of their time to doing what they do best - actually selling houses.

There’s an additional benefit, albeit one that’s a little harder to quantify. An agent who is obviously trying to lock in a deal early in the sales process is very likely to be seen as an honest broker, who may well earn long-term loyalty from the buyer. In years to come, that buyer will be a seller - and the honest broker agent is likely to be high on their list.

Win, Win

I know there’s scepticism about some of these proposals amongst agents, but I’ve seen more than enough sales collapse and offers gazumped to know that they create heartbreak for those who lose out.

Agents are the good guys in all this anyway, but they can help in damage limitation - let’s see if we can dump gazumping once and for all.

*Phil Spencer is a presenter, author, businessman and property investor. Phil’s consumer advice platform Move iQ, is a website, YouTube channel and podcast. Each preserve and reflect the same impartiality that consumers trust and base their property moving plans. Phil’s Move iQ Pro, is coming in 2022! It will connect select property professionals with Move iQ’s consumer audience. If you’re interested in hearing more subscribe here.