Avoiding Gazumping and other annoyances?

peterhjohnson

Noticed this detail on properties advertised by Bettermove Nationwide (https://www.rightmove.co.uk/property-for-sale/find/Bettermove/Nationwide.html?locationIdentifier=BRANCH^102082&includeSSTC=true&_includeSSTC=on)

You can now secure the sale with a reservation fee of £1,000 which gives you exclusive rights to purchase within a given timeframe.

Paying this fee ensures that the seller takes their property off the market and reserves it exclusively for you, therefore eliminating gazumping and aborted costs.

What can possibly go wrong? :-)

Slithery

So the standard 'modern method' of auction then.

eddddy

It sounds like it's just a 'lock-out agreement' or 'exclusivity agreement' - they've existed forever.

But most buyers and sellers don't bother with them, because they can cause more problems than they solve.

If you google lock-out agreements or exclusivity agreements you'll find lots of arguments for and against them.

In this case, it may also be a way for the EA to earn an extra £1k in fees.

Brightandcheerful

Wish I had read the comments before l lost my £1000!! No where on the website does it say this will not be refunded!! My solicitor advised me not to go ahead with a property I wanted to buy. Bettermove are not very truthful. Wouldn’t use them again!

eddddy

Brightandcheerful said:

Wish I had read the comments before l lost my £1000!! No where on the website does it say this will not be refunded!! My solicitor advised me not to go ahead with a property I wanted to buy. Bettermove are not very truthful. Wouldn’t use them again!

The company you mention seems to be a member of The Property Ombudsman Scheme.

The Property Ombudsman has a mandatory Code of Practice for estate agents which says you must be given written details about a reservation deposit scheme before you pay anything.

Those written details must include details of how the deposit can be forfeited.

If you didn't get written details - make a formal complaint to the estate agent, followed by a complaint to The Property Ombudsman.
https://www.bettermove.co.uk/complaints/
https://selfserve.tpos.co.uk/

The Property Ombudsman can instruct the estate agent to pay you compensation - like maybe your £1000 deposit.




Here's the relevant paragraph from The Property Ombudsman's code of Practice

11a
Unless the buyer and seller wish to utilise a reservation agreement, you should not generally facilitate pre-contract deposits. However, if you are instructed to do so, you must ensure that before a deposit is taken, the circumstances under which the deposit is to be held, refunded, forfeited or used towards the purchase, are clearly stated in writing, agreed by the relevant parties and a copy of the agreement provided to those parties. In each circumstance the beneficiary of the deposit (and any interest accrued) must be clearly defined.

Link: https://www.tpos.co.uk/images/codes-of-practice/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A4_FINAL.pdf

RHemmings

Brightandcheerful said:

Wish I had read the comments before l lost my £1000!! No where on the website does it say this will not be refunded!! My solicitor advised me not to go ahead with a property I wanted to buy. Bettermove are not very truthful. Wouldn’t use them again!

Estate agents want there to be a way that  they get paid for failed sales. Modern method of auction and this £1000 are one such way. Up front fees (such as PurpleBricks) are another way. 

I can understand why Estate Agents want this, as with the large numbers of sales falling through, that's a lot of work for which they aren't being paid. But, as a buyer, I don't want this coming out of my pocket. 

Personally I think the government needs to find a way for house purchases to run smoother and quicker. As they do in other countries. 

BetterMove also say the following:

Our happy sellers benefit from our fee free service; no commission and no upfront fee.

That makes me wonder where their income is coming from, other than the £1000 fee. I would expect that the fee is if not compulsory, then that there will be ways that Bettermove encourage buyers to select it. 

Herzlos

Brightandcheerful said:

Wish I had read the comments before l lost my £1000!! No where on the website does it say this will not be refunded!! My solicitor advised me not to go ahead with a property I wanted to buy. Bettermove are not very truthful. Wouldn’t use them again!

What was in the paperwork you signed?

By default, you'd assume a deposit isn't refundable. But I had a look at a listing with them (the link from the OP 2 years ago and the first result), and it says:

"You can secure the purchase today by paying an exclusivity fee of £1,000 which gives you the rights to purchase within a given timeframe."

Which makes me wonder if it's become a fee rather than a desposit, since a deposit may imply that it goes towards the balance or can be refunded.

guyvfr

RHemmings said:

Brightandcheerful said:

Wish I had read the comments before l lost my £1000!! No where on the website does it say this will not be refunded!! My solicitor advised me not to go ahead with a property I wanted to buy. Bettermove are not very truthful. Wouldn’t use them again!

Estate agents want there to be a way that  they get paid for failed sales. Modern method of auction and this £1000 are one such way. Up front fees (such as PurpleBricks) are another way. 

I can understand why Estate Agents want this, as with the large numbers of sales falling through, that's a lot of work for which they aren't being paid. But, as a buyer, I don't want this coming out of my pocket. 

Personally I think the government needs to find a way for house purchases to run smoother and quicker. As they do in other countries. 

BetterMove also say the following:

Our happy sellers benefit from our fee free service; no commission and no upfront fee.

That makes me wonder where their income is coming from, other than the £1000 fee. I would expect that the fee is if not compulsory, then that there will be ways that Bettermove encourage buyers to select it. 

It is compulsory to enter into a purchase and it does go towards the payment for the property. The agent gets an agreed sale price with the seller, below market value, then aim towards market value. They agree a purchase price with the buyer, then they get the difference minus the seller's legal fees that they cover as part of the deal with the seller.