QLD:Gazumping - understanding the process

Discussion in 'The Buying & Selling Process' started by RENI99, 24th Jan, 2020.

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  1. RENI99

    RENI99 Active Member

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    We are looking at a property for our PPOR in Redlands QLD. Agent advised that there was a contract put in place recently - conditional on the sale of the buyers property within 30 days. However there was still opportunity us to put in an offer - but only a short time window and he was happy to show us through asap. He also said he did not think the buyer would have problems in selling their property based on the area so he felt it would go through.

    I understood that that how this worked is if that the seller liked our offer (assuming that it would be unconditional and probably more $$$?) then they give the buyer 72 hours notice that they have to commit to the purchase - I think they still have 30 days to then settle.

    I may have misunderstood how this worked and although it is highly unlikely we would put in a counter offer (at least not before getting further legal advice) I wanted to understand how this process (I believe aka as Gazumping) typically works from both a buyers and sellers perspective as we are in the process of both.

    In this case the property has a long term lease in place and has been on the market since November so likely has not attracted a lot of offers.
    The property is not showing as Under offer or Under contract on realestate.com. So seem still to be looking for interested buyers.

    I understand the buyer can pull out of the contract even if they do not sell their property - is that correct? So they find something else nearby thats better or cheaper and change their mind. All they need to do is not sell their property and then the contract falls through and they get their deposit back.
    If the buyer does not sell theirs within 30 days and they still want the property then they can request an extension in time. Sellers call at that point.

    Do buyers put in conditional offers when they are not totally sure of purchasing to use as an extension of the cooling off period?
    Can Gazumping occur when there is a signed contract in place?
    Anyone have experience with either side of guzumping process?

    thanks for your input
     
  2. Trainee

    Trainee Well-Known Member

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    Have you asked your solicitor about any of this?
     
  3. RENI99

    RENI99 Active Member

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  4. Marg4000

    Marg4000 Well-Known Member

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    Gazumping is practically unknown in Queensland.

    If there is a signed contract subject to the sale of the buyer’s property, the seller can do nothing. It is up to the seller whether they allow a time extension if asked.

    There is nothing to stop an agent having a signed back-up contract, but this is only “in case” the first contract fails.

    If you are unfamiliar with buying in Queensland, a solicitor can explain the process and all implications.
     
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  5. wylie

    wylie Moderator Staff Member

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    I call gazumping when a verbal or written offer is made (in NSW and Vic I believe this is common) and while that negotiation is happening, someone else can slip in with a higher offer.

    I've never made an offer on anything other than a contract. That way, as soon as it is signed by the other party, it is binding.

    In the case you are talking, where a "subject to sale" offer is written into the contract, then if a higher offer is made, the first purchaser is given a deadline to go to "unconditional". That isn't very common in my experience, but not unheard of in such a situation.

    I know an agent who moved to NSW or Victoria and was stunned at how many contracts she put together that were gazumped (because they are done via written offer and not on a contract).
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    You can only get gazumped if the vendor has not signed the same contract as the purchaser - ie only one valid contract needs to exist. If you have negotiated, agreed terms and submitted a signed contract to the agent, you may still get played off a break if the vendor has a couple of signed contracts to play off against each other. After one of the contracts is signed, there's no backing out of it by the vendor.
     
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  7. wylie

    wylie Moderator Staff Member

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    That's what I was saying. As soon as the signed contract is signed the other party, it is a contract. In other states I believe many offers are made in letter format, which I'm told isn't secure and you can be gazumped (until you have both signed the actual contract).

    And I've always had an answer that same day, sometimes the next morning.

    The one time we signed as vendor and the potential purchaser was playing games, "I might sign tonight when you bring me the contract" and then not signing. We asked the agent to rip the contract up. If he really did want the house, too bad... so sad. He played games and missed out.
     
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  8. gman65

    gman65 Well-Known Member

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    Agent games relying on your unfamiliarity with the QLD market... If the "contract is in place" and signed by both parties it is already done and dusted and cannot be changed, unless that contract falls over due to finance/building or added conditions, such as buyer cannot sell in 30 days (maybe it is getting close to 30 days?).

    Agent may only have some sort of verbal or written offer from another potential buyer.. but that means nothing. You can put in a similar offer as well, and agent must take each to the vendor.

    Put in a written or verbal offer, and ask for the contract from the agent for you to buy at that price signed from the vendor within X hours. Once both sides of the contract has been signed, other offers cannot be presented.

    QLD market is very different to the others, in most cases I would say a much fairer process. There is also a 5 business day cooling off period (for non Auctions) after contract has been signed where you can cancel for any reason.

    Making an offer on a home
     
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  9. craigc

    craigc Well-Known Member

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    I believe Gazumping is mainly a NSW thing not Vic.
    I stand to be corrected, but ‘Typically’ in Vic, offers are presented on a s32 contract to vendor and when signed by vendor, contract is complete subject to xxxx (insert as applicable).
    Standard cooling off is 3 days (can be amended) except in auction conditions, but unlike Qld,
    Vic has a small penalty if cooling off is claimed by the intended purchaser after contract is signed.
    There are always exceptions, but I have not heard of this in Vic, where I think it can occur more easily in NSW.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    It can happen anywhere up to the point that both parties have validly executed the contract and is back with the vendor's solicitor (just to be sure).
     
  11. Trainee

    Trainee Well-Known Member

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    Does it occur more often in nsw because price negotiations etc tend to be done before a contract is signed?
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Once you've signed a contract you have agreed terms. It's a bit late then to start negotiating.

    That's why you engage a solicitor early on in the search to review the contract and advise you before concluding negotiations.
     
  13. wylie

    wylie Moderator Staff Member

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    That’s my understanding. And why we go straight to contract.
     
  14. Bunbury

    Bunbury Well-Known Member

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    My understanding is that this is generally so.

    However gazumping is evident in Openn Negotiation sales where there is an online 'auction'. I recall that it was more prevalent in the past, such as when some agents used the sale by Set Date model where agents would ask for a $500 'deposit' to accompany an offer on an agent pro forma rather than the contract of sale. I always thought of this as franchise bs and an annoying impediment to the negotiation process rather than automatic advantage to the vendor.
     
  15. DueDiligence

    DueDiligence Well-Known Member

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    So what I take from this is that in QLD , if a signed contract on a property is in place, no other offers can be entered however, the agent may still present other contracts from other potential buyers them to the seller?

    This is effectively like giving the vendor offers they cant execute on unless the contract in place contract falls through
     
  16. wylie

    wylie Moderator Staff Member

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    I'm not sure I understand your question (#15) but a good agent will continue to market the property, even with a signed contract, until that contract becomes unconditional. A good agent will not mark the listing "under offer" until it goes unconditional.

    They should not even tell a potential purchaser it is under offer unless that potential purchaser asks to go to contract.

    More than once, we've had a "backup" contract with a purchaser willing to sign and hope that the first contract fails on building inspection or finance, and their contract is sitting ready to be signed by the vendor if the first one falls over.
     
  17. Marg4000

    Marg4000 Well-Known Member

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    Not necessarily.

    If a back up contract is in place, the vendor is in a better position if the original buyer requests extensions to any clause (finance usually). Clearly, if a better offer exists, then the vendor will refuse any request to alter the terms of the original contract, which can cause it to fail.
     
  18. Rex

    Rex Well-Known Member

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    What OP describes is a common clause for subject to sale contracts in WA. The '48 hour clause' it is called, which gives the vendor the option to accept another offer over the top of the existing offer at any time in the conditional period, after giving the first buyer 48 hours to go unconditional. It makes sense from a vendor's perspective (especially in a slow sales market). I can't see what would stop this being a contract clause in other states, unless legislation prevents it.
     
  19. wylie

    wylie Moderator Staff Member

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    I've seen this clause used in Queensland (but rarely).

    As a vendor, I'd be happy to sign subject to sale of the purchaser's house, with the provision that my house continues to be marketed, and if a second buyer enters the fray, the first buyer is given a very short timeframe to go unconditional.

    It puts pressure on the purchaser, who I'm guessing would already know they can get bridging finance. But if not, they lose and the back up contact comes into play.

    I've not seen it used often, but a friend has just bought a house subject to sale of hers, and this clause was included, but they sold quickly, so it was never called into play.
     
  20. DueDiligence

    DueDiligence Well-Known Member

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    So if a signed contract is in place (and yet to go unconditional) agents would still be obligated to put forth any other contracts that me come forth, especially if they appear competitive.?