Guzumping

[Pacion]

:lol: No, not a new type of dance.

In the UK, if you make an offer to purchase an apartment or house and your offer is accepted by the owner, then a few hours or days later, you are told that someone put in a higher offer which the owner has accepted and therefore you have lost the property, it is called guzumping or you have been guzumped.

One of the reasons why guzumping is said to be bad, is that it fuels increases in house prices. This "practice" has also been said to be one of the reasons why the UK, particularly London's, property market is so high.

I am guessing this happens all over the world, more frequently in some than in others. What is the above scenario called in your part of the world? Are there any steps taken by the government or regulators (at any level - local, state or national) to try and prevent this happening?

[africana]

that's dishonest

[cornutt]

In most parts of the U.S., once the seller has accepted an offer, it's a done deal (barring any contingencies that might have been in the offer). Most state courts take this very seriously. In fact, this is one of the few cases in U.S. tort law where you can sue for "specific performance", meaning that if you win, you can force the defendant to sell you the property and the court will void any other transaction the seller makes. Buyers, on the other hand, can and do back out. That's why a smart seller requires a buyer to include "earnest money" with an offer. Typically, this is in the range of $500-5000. If the buyer backs out, the money is forfeited to the seller. (This actually happened to us when we sold our house last summer.)

[Pacion]

What is the time period between someone making an offer and having to give the "earnest money"?

We have something similar here which is called "exchange of contracts" and could take a few weeks to take place. Only that exists in the meantime is "my word is my bond" type of agreement. Other UK DFers would have to help me out here. I am of the impression that UK buyers don't sue for a number of reasons - it is costly, time consuming and buying a property are both of those already. (Plus the law does not provide any protection for prospective buyers.) In addition, some people (certain estate agents and sellers?) take the view that if someone comes in with a higher offer, it is all money in their pocket at the end of the day. That a verbal agreement already exists is neither here nor there. :?

Just to be clear, the above scenario, or guzumping does not occur where the seller is considering the offer, has yet to say "yes" or "no" and someone else comes along and makes a higher offer. The estate agent(s) may then have a mini bidding war or they take it to sealed bids, with the interested parties "making their best offer".

The guzumping takes place when the seller has given a verbal agreement that a particular offer has been accepted and then rejects it for a later offer, often at a higher price.

[Twilight_Elena]

I really tried not to comment on the word guzumping, but it's too much!
*loud cackle* :uplaugh:

Twilight Elena

[Joe]

Usually, the earnest money accompanies the purchase offer, i.e. when you tell the seller you want to buy the house for $x you also send a check for your earnest money.