Gazumping Insurance

Soon there will be a kind of insurance to protect home buyers from the worst and most common pitfalls of house buying.

Otherwise known as Home Buyers Insurance, or HBEI, could be offered throughout England and Wales to all house buyers and is only available in these countries.

So what is it all about? An insurance product where it covers customers expenses of upto 1,500 pounds, which also includes 500 pounds Survey/Valuation Fees, 750 pounds Conveyancing Fees (searches inc) and 250 pounds Mortgage/Lenders Fees.

To those who are in the process of buying a home, this can sound great. It’s designed to protect people who put in an offer for a property, but then they are out bidded by someone else who can give a higher offer to the seller. This can start a nasty battle of the buyers out bidding each other, where one of them has to eventually accept losing their dream home, and also a large amount of money during the process. Known as ‘gazumping’ is has become common place within the indurstry in England and Wales.

You would think that once an offer has been accepted thats it until the process is finished. But gazumping occurs because even after an offer has been accepted, it is not legally binding for the seller to settle for just that one offer.

It remains pretty common due to the high demand and shortage of properties, add to that the current strength of the economy.

But on the bright side, HBEI also covers other problems which may occur and stop the property purchse being completed, such as:

• The vendor withdraws the property for sale, with reasons not within the buyers control.
• Due to redundancy or relocation, the purchaser(s) cant or are unwilling to complete the sale.
• If the property gets damaged during the coverage period, and the costs are more than 10% of the property value.
• If the property is highlighted by a local authority search as being the subject of a compulsory purchase order.
• An offer that is at least 1,000 higher than the offer a vendor has accetped from the purchaser.
• The vendor isn’t legally allowed to sell the property.
• The initial mortgage lender valued it less than 90% of what has been offered and accepted for the property.

If something was to go wrong then people can be rest assured they can be covered by HBEI, and carry on with the purchase from start to finish.

How about the seller, are they any better protected with this insurance? They still face the same risks and possible delays they always have. The problem with gazumping is that research shows that more than 30% of offers made from gazumping will fall through anyway. This will usually result in another 1-3 months delay whilst you try to sell to the original buyer or find a new buyer.

If you are having difficulty selling and need a quick property sale, contact us as we can usually help.

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