Sale Agreed - Gazumped

leinster93

I am wondering what peoples views are on this other that walk away.

Over the weekend I spoke to a relation who went sale agreed on a property recently and they had a survey carried out. The survey revealed the roof needs to be redone and there's also asbestos.
Based on these issues the buyer revised the price downwards by 10K but was refused. The Estate agent said he was going back to the other interested buyers who were in the picture before the sale agreed was made.
The EA came back and said a previous interested party has made a higher offer. Foolishly my relation matched the other persons offer + 500 and it was said the seller would close the sale on this. Now the estate has come back and said the other interested party has put €500 over the sale agreed price which has been accepted.
Other than being dumbfounded and advised they should just walk away, is there no law to prevent this carry on of the estate agent?

Bacchus

Don't think there's any law against it. The EA is just trying to get the highest offer for his/her client. Unfortunately (from what I understand), when you go sale agreed and put on the holding deposit, the buyer is locked in but the seller can still pull out. That's why it's important to have a good solicitor and surveyor who will do the job well and do it promptly so the deal can be done ASAP (reducing the risk of a gazumping).

Feel free to correct me, that's just my limited understanding as I gear myself up as a FTB.

Butters1979

What law would you be looking for? The housing market is a free market and the seller can agree to sell to someone else if they out in a higher offer. If you went sale agreed most estate agents would not entertain any renegotiations. However this would not stop someone contacting the vendor directly to gazump which can happen. This situation is slightly different as it looks like the buyers initially changed the offer based on the survey findings, so technically it was the buyer that re-opened the biding process. Either way, nothing is done until both have signed the contracts and keys are in your hand.

In your question of walking away, forget the emotional piece and the fact it now looks like there is bad blood with the EA and the vendor. Ask yourself what the property is worth to you (nothing to do with anyone else’s opinion or market rates). If it is worth the new asking price to you then don’t walk away. If it is not worth it to you, then walk away.

Sun in Capri

The previous interested party may not have had a survey done yet and may not be aware of the issues. This may not be be end of the story.

P. Breathnach

Bacchus wrote: »

... when you go sale agreed and put on the holding deposit, the buyer is locked in but the seller can still pull out...

Half true: the buyer can still pull out.

The payment of a deposit is a token of good faith, nothing more. By paying out €x,000, the buyer is showing serious intent. There isn't a corresponding gesture by the seller, but if an EA continued to deal with other prospective purchasers it might be considered professional misconduct.

In the case described by OP, I can't see that the EA did anything wrong. Once the purchaser reopened negotiations, it was fair and reasonable to go back ton the market.

Zadkiel

Bacchus wrote: »

Don't think there's any law against it. The EA is just trying to get the highest offer for his/her client. Unfortunately (from what I understand), when you go sale agreed and put on the holding deposit, the buyer is locked in but the seller can still pull out. That's why it's important to have a good solicitor and surveyor who will do the job well and do it promptly so the deal can be done ASAP (reducing the risk of a gazumping).

Feel free to correct me, that's just my limited understanding as I gear myself up as a FTB.

Nobody is locked in when the booking deposit is paid. Either party can pull out any time until you close. Your booking deposit is also fully refundable, just a point to note.

Butters1979

P. Breathnach wrote: »

Half true: the buyer can still pull out.

This is correct. The deposit to the EA is just that. A show of commitment from the buyer, and either party can pull still pull out.

As someone else has already pointed out though, the other buyers are yet to have a survey done, and could well pull out themselves or reduce the offer.

April 73

Your relation agreed to pay a price for a property. A survey revealed some issues & they tried to renegotiate the price.
This reopened the whole process as the seller probably felt that your relation was trying to bargain down the price. "Sale agreed" works both ways.

Buying & selling houses is a fraught experience, with neither side ever quite trusting the other until contracts are signed. The sellers may have felt your relation was a messer & that the sale wouldn't proceed so they looked for other options.

There is no law in Ireland to stop this happening.

leinster93

Thanks for the replies. The key thing is, as pointed out, that revising the price downwards due the the issues reopened negotiations.
Based on the replies it basically would have been professional misconduct on the estate agents behalf had the price agreed not been renegotiated.
Seems very strange though that a previous bidder who was outbid has now come back into the loop, three months after it went sale agreed, and gone €500 over the sale agreed price.

Butters1979

Yes the buyers reopened the bidding process therefore cancelling the 'sale agreed' and starting again.

I see your main concern is that you are suspicious about the original buyer who was outbid coming back, as I would be too. It could well be nasty games by the EA and vendor as they would not be happy you changed your offer.

However remember in 3 months things may well have changed for the other bidder. They could have had their eye on a different property 3 months ago therefore reducing their appetite for this house at the time, but that may now have gone. 3 months further into house hunting they may well have become more desperate to buy now, and most importantly, they could well have 3 months more savings, and therefore simply to be able to afford a larger offer now.

The only way you will no is if you refuse to up your offer.

spaceHopper

It's their own fault they opened up the process again. Especially since they were the ones to reduce it by 10 K then come back up by 11 K. If I was the seller I would see them as chancres and sell to the other buyer.

Cuddlesworth

spaceHopper wrote: »

It's their own fault they opened up the process again. Especially since they were the ones to reduce it by 10 K then come back up by 11 K. If I was the seller I would see them as chancres and sell to the other buyer.

It's silly to reopen price negotiations when you get told you need to fork out for a roof rebuild and asbestos removal? 2006 here we come baby.

leinster93

I got the impression the buyers went to their limit and they tried to negotiate the price down as the bank wouldn't give a single cent more.
There's a lot of work to do on the house and the additional cost they hadn't expected, to the extent that the surveyor presented. It might just be a blessing in disguise... It is a pity the banks didn't proceed in this fashion pre 2007.

I Am The Law

leinster93 wrote: »

I got the impression the buyers went to their limit and they tried to negotiate the price down as the bank wouldn't give a single cent more.
There's a lot of work to do on the house and the additional cost they hadn't expected, to the extent that the surveyor presented. It might just be a blessing in disguise... It is a pity the banks didn't proceed in this fashion pre 2007.

Amen!

the_syco

leinster93 wrote: »

Foolishly my relation matched the other persons offer + 500 and it was said the seller would close the sale on this. Now the estate has come back and said the other interested party has put €500 over the sale agreed price which has been accepted.

Tell your relation that they had a lucky escape!

leinster93 wrote: »

Seems very strange though that a previous bidder who was outbid has now come back into the loop, three months after it went sale agreed, and gone €500 over the sale agreed price.

I'm guessing that the same thing that happened to your relation happened to the previous bidder, and is now retrying their luck.

Jen44

The buyer can pull out until the contracts are signed. Hopefully its not the roof thats asbestos it will cost a lot of money to get a whole asbestos roof removed before you even factor in the replacing of the roof

seamus

Cuddlesworth wrote: »

It's silly to reopen price negotiations when you get told you need to fork out for a roof rebuild and asbestos removal? 2006 here we come baby.

No, the point is that if you reopen the price negotiation, you shouldn't be surprised when the vendor is opens those negotiations to 3rd parties.

ted1

In the sellers eyes , the buyers were trying to mess him around.

i'd have done the same as the sellers.

Dr_Bill

So the roof needs to be redone and there is the presence of asbestos, Asbestos is seriously nasty stuff and not to be taken lightly! The cost of removal & safe disposal of asbestos by a specialist subcontractor is not to be taken lightly. Will €10k be sufficient to cover the costs for the work to be done? Have you had a price for this or a guesstimate?

I guessing the house is 1950's/1960's vintage and hence the roof insulation is probably not up to today's standards anyway. That needs to be considered too, something like sprayed foam these days for a typical roof would be in the region of €1500-€2000.

Let someone else buy the turkey unless you have a pot of money to throw at it.

davo10

I think the op would own the moral high ground if this was as straightforward as the EA going back to him/her with a higher bid after the initial bid was accepted. Most properties are sold "as is" and the op opened the door by reducing the initial accepted bid downward after a survey identified issues. You can say that the op had every right to reduce the bid when asbestos was found, no argument there, but someone else is willing to pay the asking price so I can't see how the op can have a complaint, the vendor/EA is pretty much doing to the op what the op did to them, altering the bid after it had been accepted subject to further information.

sonny.knowles

OP, you relative attempted to gazunder... And got gazumped. Shouldn't be too surprised.

leinster93

sonny.knowles wrote: »

OP, you relative attempted to gazunder... And got gazumped. Shouldn't be too surprised.

I'm not sure that is entirely true. The house was put on the market and it was questioned if there were any issues with the house. The buyers were informed that there were no issues. There is a lot of work to do on the house but as I understand it was placed on the market in good faith; i.e that the house is up to a living standard, not where the roof needs to be redone or where there is asbestos. It is expected to set aside a percentage to rectify issues unveiled by a surveyors report but I believe the price that the house was put on the market at was with the expectation that the roof was in good working order and there being no presence of asbestos.
I was also informed by my relative that no solicitor will close the deal on a house where there is asbestos until the seller has it removed (I think this is the law that the seller has to deal with the removal before sale. I could be wrong though). Not sure what the situation is regarding this. I think my relation revised the price downward to include themselves deal with the asbestos.

I'm not of the belief that gazundering is the correct term under the circumstances.

ted1

Asbestos is fine unless you drill into it or break it up. there is no law requiring its removal.

spaceHopper

Cuddlesworth wrote: »

It's silly to reopen price negotiations when you get told you need to fork out for a roof rebuild and asbestos removal? 2006 here we come baby.

Let's say they week sale agreed for 300K they then reduced their offer to 290 because of "the work", and they needed to keep some money back for the work then as soon as there was an offer of 300500 they went to 301000, where did they suddenly get the extra 11K 300K the 1K + 10K to do the roof?

davo10

leinster93 wrote: »

I'm not sure that is entirely true. The house was put on the market and it was questioned if there were any issues with the house. The buyers were informed that there were no issues. There is a lot of work to do on the house but as I understand it was placed on the market in good faith; i.e that the house is up to a living standard, not where the roof needs to be redone or where there is asbestos. It is expected to set aside a percentage to rectify issues unveiled by a surveyors report but I believe the price that the house was put on the market at was with the expectation that the roof was in good working order and there being no presence of asbestos.
I was also informed by my relative that no solicitor will close the deal on a house where there is asbestos until the seller has it removed (I think this is the law that the seller has to deal with the removal before sale. I could be wrong though). Not sure what the situation is regarding this. I think my relation revised the price downward to include themselves deal with the asbestos.

I'm not of the belief that gazundering is the correct term under the circumstances.

"Living standard" and "issues" are subjective terms, you can take for granted that every house on the market will have "issues" based on the buyer's standards and expectations. Gazundering is the correct term as the house was marketed as seen, it is up to the buyer to find any issues that they are unhappy with. Lowering the price after a bid is agreed is no better or worse than the EA coming back with another, higher bid.

whippet

what you need to get your head around is the fact that the deal has gone from 'Sale Agreed' to 'under offer' again. There is no sale agreed at the moment as you have revised your offer, hence it is still on the market and the sellers would be mad not to listen to other offers out there

seamus

spaceHopper wrote: »

Let's say they week sale agreed for 300K they then reduced their offer to 290 because of "the work", and they needed to keep some money back for the work then as soon as there was an offer of 300500 they went to 301000, where did they suddenly get the extra 11K 300K the 1K + 10K to do the roof?

?

Does it matter? The bidding doesn't end when the buyer has hit their funding ceiling. It ends when the buyer is not willing to pay any more for the property. Whether the buyer has €500 or €500,000 more available to them is immaterial.

It is perfectly valid though to reduce your bid if you discover the house needs work, since you bid on the house as presented, in the presumption that any remediation works will be small. Major works reduce the value of the property.

Worth noting that if you send a copy of the engineer's report to the auctioneer they're required to disclose those details to any other potential buyers. So in this case, I would make a point of giving the auctioneer a copy of it.

Jen44

leinster93 wrote: »

I'm not sure that is entirely true. The house was put on the market and it was questioned if there were any issues with the house. The buyers were informed that there were no issues. There is a lot of work to do on the house but as I understand it was placed on the market in good faith; i.e that the house is up to a living standard, not where the roof needs to be redone or where there is asbestos. It is expected to set aside a percentage to rectify issues unveiled by a surveyors report but I believe the price that the house was put on the market at was with the expectation that the roof was in good working order and there being no presence of asbestos.
I was also informed by my relative that no solicitor will close the deal on a house where there is asbestos until the seller has it removed (I think this is the law that the seller has to deal with the removal before sale. I could be wrong though). Not sure what the situation is regarding this. I think my relation revised the price downward to include themselves deal with the asbestos.

I'm not of the belief that gazundering is the correct term under the circumstances.

We just bought a house with an asbestos roof shed. The sale went ahead grand its not a legal issue having asbestos. It becomes an issue when it has to be removed. As someone else said asbestos is fine so long as you dont disrupt it. The expense comes when you have to remove it as you need specialists in to handle it. We have decided to leave the shed roof alone for the moment as we will be knocking the shed for an extension in a year or so and will factor the cost into the removal of the roof at that time.

the_syco

I can see the house being sold for a lot less in the end than what the OP's relation had offered... with the existing bidder also reducing their bid.

leinster93

seamus wrote: »

?

Does it matter? The bidding doesn't end when the buyer has hit their funding ceiling. It ends when the buyer is not willing to pay any more for the property. Whether the buyer has €500 or €500,000 more available to them is immaterial.

It is perfectly valid though to reduce your bid if you discover the house needs work, since you bid on the house as presented, in the presumption that any remediation works will be small. Major works reduce the value of the property.

Worth noting that if you send a copy of the engineer's report to the auctioneer they're required to disclose those details to any other potential buyers. So in this case, I would make a point of giving the auctioneer a copy of it.

I'm not sure that would be wise though. In doing so it would probably be viewed as trying to force the sale in your favour, inevitably p*$$ing the seller off although I suspect they're peed off anyway...

Butters1979

whippet wrote: »

what you need to get your head around is the fact that the deal has gone from 'Sale Agreed' to 'under offer' again. There is no sale agreed at the moment as you have revised your offer, hence it is still on the market and the sellers would be mad not to listen to other offers out there

This is the main point here. If a house is sale agreed and either side try to change the asking price then it is no longer sale agreed and is back open to bids from anyone.

I understand the buyer had a reasonable reason to change their offering price but in doing so they re-opened the bidding process, and have now been outbid. You can either decide it is worth the money and put in a higher offer, or decide it isn't and walk away.

There is also the potential that whoever has outbid you will pull out themselves when they discover the issues.