Gazumped! The scourge is back

AT first it all seemed so straightforward. Within days of starting his search for a house, Scott Duncan had found one he loved and seen his offer accepted.

As a firsttime buyer, it was easy to dismiss the tales of woe trotted out by more-seasoned property buyers as just the bitter memories of an unlucky few.

But he should have known it was too good to be true. Just days before his surveyor was due to go and value the house, he was told the owner had accepted a higher offer and the deal was off. He had been gazumped.

"I have to admit I was completely taken aback," says 34-year-old Scott. "Maybe I was a bit nave, but I thought that once my offer was accepted, it would just be a case of sorting out the details.

"The owner seemed a decent sort, but it just goes to show that where money is concerned you can't trust anybody. This has really shaken my faith in human nature and I admit it's left me feeling very bitter."

Scott's experience with a house in Darlington is being replicated across the North-East, as a booming property market sees house prices spiralling and desperate buyers fighting it out for a limited number of homes.

"It is very competitive, and it seems to be everywhere in the region," according to Paul Reynolds, chairman of the North-East branch of the National Association of Estate Agents. "We have got people coming in here on a daily basis asking what is on the market, but houses are selling so quickly.

"We have got people offering more than the asking price, and sticking letters in people's doors saying they're looking for a house."

The feverish property market is a result of low interest rates, making borrowing for a mortgage an attractive proposition, and a shortage of houses coming onto the market. With few houses available, home owners are reluctant to put their property up for sale in case they find it difficult to find somewhere else, so fuelling price rises and making it even harder to move.

According to the Halifax, although the North has the lowest average house price in the UK, values are still rising by almost 14 per cent a year. And Mr Reynolds can quote one house which sold for £76,000 and five months later changed hands again, this time for £86,000, the equivalent of an annual rise of more than 30 per cent.

The boom has also seen the return of gazumping, a practice which haunted the market in the 1970s, and it is not unusual for buyers to offer five per cent above the asking price in the frenzy to get their hands on their chosen property.

But while estate agents are legally obliged to pass on details of higher offers, and get a higher commission the higher the price, it is not a practice they support, says Mr Reynolds.

"We hate gazumping. It doesn't do us any good and it gives us a lot more work and we get ourselves a bad name," he says. "People blame the agent, but it is up to the owner. One problem is that you can say you want to buy a house, but between saying that and actually getting the keys, there is a time lag, and even during that time the value might have gone up, so sometimes the vendor wants to put it back on the market."

A survey by the Yorkshire Building Society last week revealed that one in ten house buyers would be prepared to make a higher offer on a property once a sale had been agreed, and one in 15 would be willing to go above the asking price.

And while prices everywhere may be rising, Darlington has become one of the North-East's property hotspots, according to Lee Smurthwaite, director of estate agents Stuart Edwards. This is partly a result of prices having lagged behind many other areas over the past ten years, and partly as homes in neighbouring North Yorkshire have become too expensive for many buyers, leaving Darlington as the next best bet.

'It is very difficult for the first-time buyers, and there are several buyers chasing the same property. People can spend six months trying to find a decent house," he says. Buyers are advised to sort out their mortgages before looking for a home, to speed up the process and cut the risk of being gazumped.

"Gazumping has been a perennial problem for estate agents," he adds. "We act for the owner and we're charged with getting them the best possible price on the open market, but it doesn't help if you have just had a bid accepted and someone comes along and offers the owner more.

"We ask the owner if they will suspend viewings, but it is up to them. If they have already shaken on a deal, we advise them not to take a higher offer, and just because someone has fallen in love with the property it doesn't mean they will be able to get the finance. Most people are honourable and if they get the price they will stick with that, but there are people who don't."

The Government promised four years ago to end the practice of gazumping, but no measures have yet been brought forward. A spokeswoman for the Department for Transport, Local Government and the Regions says they were still planning to fulfil that commitment but it may be the autumn before legislation can be brought forward.

She says vendors will have to put together sellers' packs, including surveys, helping buyers know they are serious about the deal and not just putting their home up for sale to test the market. And they are also looking at adopting the Scottish system, where a buyer's offer is legally binding if it is accepted by the vendor.

But mortgage lenders have been lukewarm over the impact the sellers' packs would have, and Lee Smurthwaite is sceptical that the Government's proposals would make a difference.

"In principal I'm in favour of anything to speed up the system, but they way they are suggesting seems unworkable," he says. "Most estate agents are in favour of anything which shortens the time to exchange of contracts and makes it simpler for the buyer and seller, but there needs to be a lot more consultation first."

But in the meantime, buyers will have to rely on hope - and faith in human nature - if they are to get what they want. The one consolation to people like Scott Duncan, who have been gazumped, is that it is just as likely to happen to vendors as buyers.

"It is a very difficult time for buyers, but then most vendors are also buyers and so they get the brunt of it as well," says Paul Reynolds. "In this sort of market, the buyers have got no control and the vendors have it all, and you seem to get this every five years. I just wish it would slow down."