Gazumped!

A slang word, absent from many dictionaries but a word capable of striking fear into the hearts of buyers of real estate.  ‘To bypass by selling at a higher price to another’ is the meaning provided by the Macquarie Dictionary.   The old maxim of an agreement based on honour has largely fallen by the wayside which can have heart wrenching effects if you get gazumped.  The question is where do you draw the line between what is fair and reasonable for both the owner and purchaser in a real estate transaction.  Shouldn’t the seller of a property be entitled to the best price available but by the same token a buyer doesn’t want to be caught with a ‘lemon’.  One of the methods the law makers have used to attempt to protect buyers in this type of situation is introducing a Cooling Off period in all residential contracts which enables a buyer to get out of a contract within a period of five business days if they strike a problem.  You still need to put your deposit down and sign the Contract but then you have some time up your sleeve to speak with a solicitor, get the Contract checked out, ensure you can get finance and check the property out before the Contract becomes binding.  In the meantime the Vendor is bound and cannot accept any other offers.  A buyer can validly rescind the Contract but they forfeit 0.25% of the sale price. ($250 per $100,000)  In New South Wales we also have what is known as ‘Vendor disclosure legislation’ where the seller is required to provide certain warranties regarding title, in the Contract, which has to be ready before the property goes to the market.  It is all designed to speed up the transaction so a buyer doesn’t have to make a large number of legal searches, prior to signing the contract.  This has resulted in a softening of the ‘Caveat Emptor’ (Buyer Beware) principle, that can leave a buyer nervous in a rushed transaction.   While the legislation covers a warranty as to title it does not extend to the condition of any buildings or structures on the property and a prudent buyer should always consider pest and building inspections.  The purchase of a house or land is likely to be the biggest purchases you will ever make and a chat with the right solicitor could help save you thousands of dollars.  At Johnston Tobin Solicitors we will work quickly to protect you and actually do a full review of the Contract, so you know what you are buying, something many conveyancers don’t do.  Give us a call.