Is this ethical?

HouseHunter001

Apologies that this is a bit long and complicated, but I think I need to paint the whole picture.

I'm currently renting and am purchasing a house (to live in) as a cash buyer, and I (thought I had) found my ideal home well within my price range, so arranged a viewing through the EA. EA told me that the property was already under offer, and the seller would accept the asking price or just below.

I then realised that the property was also for sale through another EA - call them EA2 - which for various reasons I thought would be better to deal with, plus I was already on their books, so I rang them and asked if I could deal with them instead. They said no, I would have to go back to EA1 since the initial viewing was with them; fair enough. They also indicated that the sale of the property had in fact been agreed with the other buyer, who was also a cash buyer, but the vendor had asked for the property to continue to be advertised on the website, and was still open to offers. It was all a bit confusing to be honest, and I wasn't really sure what the status of the other buyer's offer was, especially since the house was still shown as for sale on both EAs' websites with no indication of SSTC etc.

So I went back to EA1 and offered the asking price, and was told that the vendor had accepted, and wanted a quick sale.

A few hours later, I was telephoned by EA2 to ask me if they could let me have details of some properties that I might be interested in, and I told them that I had already had an offer accepted on this particular property. They were shocked, and told me that THEIR buyer had already shelled out for a survey and instructed solicitors, and it had been agreed that there would be no more viewings, and EA1 should also have been aware of this (although the property would continue to be marketed on the website which, they implied, is standard practice up to completion). EA2 also told me (when I asked) that the other prospective buyers are, like me, people who want to live in the house, not buy-to-letters. Clearly the vendor - who had let the property and apparently lives abroad now - had not told EA2, or presumably their buyer, about my offer. EA2 promised to speak to the vendor, and I imagine they will speak to their buyer also.

So I rang EA1 and asked them what the heck was going on, and they said that they knew the property was under offer, but knew nothing about the satus of the other offer or what stage it had reached. So maybe the vendor kept them in the dark, too. It's disturbing that no-one would have found out about this situation if I hadn't happened to be taking to both EAs (which, I imagine, most buyers don't do).

I am really not sure at this stage whether it is ethical to proceed with my offer, or if it would constitute gazumping, so I contacted a friend who's an estate agent (not involved in this sale). He said I shouldn't have qualms about it, since (a) the property was still on the market (through the EAs' websites) and (b) the other buyer had offered below the asking price, and I had offered the asking price. Unfortunately, he said, it's not at all unusual for sales to fall through for various reasons, even after buyers have spent money on surveys etc.

The other weird thing is that when I viewed the house I noticed that the EAs' board had been taken down and was lying in the driveway (not removed or marked 'sold'). I wondered in passing whether it might have been deliberately 'hidden' by the other person who'd put in an offer, but at the time I thought it more likely that it had just been blown down in the wind (of which there has been rather a lot). Would it be normal for EAs to take down boards and leave them lying there like that, when a house is under offer?

I really love the house and have been unable to find anything else nearly so suitable in the area, and don't want to lose out on the purchase unncecessarily, but I'm having a crisis of conscience and don't know what to do. Should I withdraw my offer, or proceed? Is it likely that the EAs are telling me the truth, or could they be spinning me a yarn because each of them wants the sale? Or is it only the vendor who's being a toe-rag?

The thing is, if I do pull out for 'ethical' reasons, I'd better do so quickly for the sake of the other purchaser. (If the facts are as they appear, the vendor will deserve whatever's coming to him.)

Help!!

ValHaller

The unethical thing - all though you fell into it innocently - was to attempt to deal with EA2, having taken a viewing through EA1. This complicates matters no end for everyone else. Otherwise, given the circumstances, your EA friend is right, you should have no qualms about going forward with your higher offer

The vendor may or may not have been misleading the original offerer/buyer. They could have said 'OK we will go with your offer, but will remain on the market and may accept a better offer'. In which case, there would be no real issue for them to accept your offer. Equally likely, EA1 was misleading you when giving you a viewing - they knew that the house was supposed to be off the market, but as they had the keys, they were able to give you a viewing and saw the opportunity to snatch the sale for themselves. Even if the original offerer/buyer had been misled, I would see nothing wrong with you proceeding with your offer if you had stayed with EA1 as you would not have been playing anything on anyone.

Unfortunately, having gone to EA2, you have queered the pitch and got yourself caught in the middle of a potential battleground between EA1 and EA2. It is probably rare, but not unknown, for agents to uproot - or even destroy - each other's signs when they are in conflict.

Additionally, you may have put yourself in the position that having approached EA2, they can bully the vendor into believing that if he goes with you, he has to pay them a commission as well as EA1 - which might make you too hot to handle for the vendor. Although EA2 were correct make you go back to EA1, rather than even hear an offer from you. I do suspect that they rang you back with details of other properties after hearing that an offer had been accepted via EA1 as a pretext to probe whether it was you had made that offer - thus giving them the fact they needed to apply pressure on the vendor

And beyond this, if you don't get this property, you may have marked yourself out as trouble to both agents - but you can probably defuse this in passing by referring back to the issue and saying that you made a mistake which complicated things and you won't be repeating it. You need to do your research more carefully beforehand, finding all the agents handling any property you are interested in and making your choice of which one to go with before you view.

moneyistooshorttomention

Only one certainty here - that estate agent sign was blown over by the wind or pushed over by vandals.

If it had been either the other buyer or the other estate agent involved - then that sign would have vanished completely. The other buyer would have taken it away with them (if they had a car to do so). If they didnt have a car and were too nervous to risk being seen carrying the sign down the street, then they would have hidden it as well out of sight as they could.

chewmylegoff

My interpretation is that the vendor hasn't taken the property off the market or agreed that there would be no more viewings as claimed by EA2. I expect EA2 is worried that they are going to lose the sale they have arranged and therefore their commission, hence their supposed "shock" ( which is not consistent with the first story EA2 told you which was that the vendor was still open to further offers). No doubt if EA1 had introduced the other buyer and you were going through EA2 you would be getting a different story.

What you are doing does amount to gazumping, but the other buyer clearly hasn't offered enough to persuade the vendor to take the property off the market, thus leaving themselves more at risk of the chance of gazumping.

If you do proceed, you could tell the agent that the offer is conditional on the vendor instructing both agents to remove the property from rightmove completely.

BigG10

Its unethical and I wouldn't have even put the offer in on the house knowing there was another buyer. :mad: Its gazumping and just isn't fair. A deal is a deal and you shouldn't interfere. Sorry to be grumpy about it but this happened to us on our first time of buying. We paid solicitors and for the survey and the legal searches were underway. At that point we were first time buyers - it all fell through and we lost the house - took us another few months to save up the money again! :mad:

moneyistooshorttomention

Not a "black and white" situation on the gazumping front.

Yep..it sounds like OP is attempting to gazump on the one hand. On the other hand, we don't know how much the other viewer offered.

When condemning gazumping, then I would imagine that, in more "normal times" its been a case of, say, an £180k house having had £175k offered by one viewer and then the vendor allows someone to gazump them by offering £178k instead. At those sort of figures - ie not much in it and both of them came pretty near to the asking price - then no-one should be attempting to gazump.

However, in this day and age, its entirely possible that a desperate seller might have accepted £165k on their house (thinking that was all they could manage to get shot of the house quickly for) and then another viewer came along and offered £175k (ie a more "normal" sort of offer for that asking price). In those circumstances, then an argument could be made that the first viewer had "brought it on themselves" by offering so low and that they wouldnt have been gazumped if they had made a more reasonable offer in the first place.

Not referring to you BigG here incidentally - as I'm guessing that you made a "reasonable offer" not far below asking price anyway and, in that case, would have every right to feel aggrieved (not one of those automatic "lets try for 10% off offerers"...).

mrsbmartin

We are FTB's and, whilst I get that Gazumping is a potential financial drain on buyer no1 - if I'm buyer no2 and I really want that house and I can afford it then I'm going to do everything I can to make sure I get it. Buying a house is not a necessity and therefore should be treated as a luxury good - ie the normal rules of supply and demand apply and it goes to the highest bidder. Everyone always advises that you have enough cash in the pot to pay for solicitors fees, surveys etc at least 2 or 3 times over as house sales can fall through for any number of reasons.

All's fair and that...

BigG10

mrsbmartin wrote: »

We are FTB's and, whilst I get that Gazumping is a potential financial drain on buyer no1 - if I'm buyer no2 and I really want that house and I can afford it then I'm going to do everything I can to make sure I get it. Buying a house is not a necessity and therefore should be treated as a luxury good - ie the normal rules of supply and demand apply and it goes to the highest bidder. Everyone always advises that you have enough cash in the pot to pay for solicitors fees, surveys etc at least 2 or 3 times over as house sales can fall through for any number of reasons.

All's fair and that...

Well I tend to disagree and agree! We are on our second property purchase now and we have already had two failed transactions so we have learnt the lesson of having enough money to pay for two sets of searches and two surveys! Just paid for our third.

However, I still think its unethical to gazump. Obviously its based on opinion. There have been PLENTY of houses that we have found on the net and phoned up to try and view only to be told its gone and under offer. We have left it at that...despite as you say 'really' wanting the house. It just doesn't sit right with me. I obviously accept its a matter of opinion.

In answer to our first property...we put in an offer 2k away from asking price and were first time buyers. The other person put in full asking price and were in a chain - they got it. Greedy seller. Incidentally, that house is now up for sale again and it only on for the previous asking price. :T So, what goes around comes around I suppose.

princeofpounds

It's the seller who bears moral responsibility for gazumping, not a buyer. Just because an offer is there, doesn't mean it has to be accepted. And as you yourself have shown, often buyers are not in possession of the facts to know if they are gazumping or not.

Blaming buyers for gazumping would be just as illogical as blaming sellers for gazundering.

lfc321

How do you know that once you've spent money on surveys etc the other prospective buyers won't come back with a slightly higher offer and the vendor will switch back to them?

It's whether the vendor is being ethical or not that you want to worry about since our system means that you have to place quite a bit of trust in them.

ValHaller

princeofpounds wrote: »

It's the seller who bears moral responsibility for gazumping, not a buyer. Just because an offer is there, doesn't mean it has to be accepted. And as you yourself have shown, often buyers are not in possession of the facts to know if they are gazumping or not.

Blaming buyers for gazumping would be just as illogical as blaming sellers for gazundering.

Exactly right.

Let's define gazumping precisely.

Gazumping is when a seller accepts an offer and agrees to go off the market until exchange, but accepts another offer and faces the original purchaser with the option of matching the new offer or losing the property.

There is nothing wrong with a seller taking 2 buyers or more to exchange, provided all buyers are made aware of the situation - or the possibility - before they incur expense