Can I get outbidded after I paid my deposit?

Shiranui

Dear All, advice please.

I have just committed to buy a property today, by email (approx 10am)
I am dealing with an established agency in Dublin, a representative contacted me today approx 09:11 to get all necessities sent to him by email.
I have followed up in the next 30 minutes:
I have stated I am making an offer.
I have confirmed my address.
I have sent in my sanction in principle in attachment.
I have transferred a deposit (5k) to the account requested.

I just called the chap back and he states that someone have outbid me by 5 thousand!

Is this legal, considering I have transferred my deposit?

I would highly appreciated all feedback!

Tigger

Shiranui wrote: »

Dear All, advice please.

I have just committed to buy a property today, by email (approx 10am)
I am dealing with an established agency in Dublin, a representative contacted me today approx 09:11 to get all necessities sent to him by email.
I have followed up in the next 30 minutes:
I have stated I am making an offer.
I have confirmed my address.
I have sent in my sanction in principle in attachment.
I have transferred a deposit (5k) to the account requested.

I just called the chap back and he states that someone have outbid me by 5 thousand!

Is this legal, considering I have transferred my deposit?

I would highly appreciated all feedback!

Yes you can be out bid up until you sign contracts
Stupid system but it happens

eyescreamcone

Both sides can pull out of the deal until contracts have been signed.
So as contracts have not yet been signed on your deal, the owners have every right to accept the higher bid.

It's not polite but it's legal.

eyescreamcone

Gazumping is the term used for this practice.

It was all the rage back in the day.

No Pants

Could also just be trying it on, a phantom bid to see if you can pony up some more cash, especially since you just handed over €5k. Ask for your deposit back immediately and say nothing more. Unless you're happy to potentially be the only party in a bidding war.

Wizard01

Happened to us just before Christmas

So we pulled out completely and walked away, property still for sale now so don't know if it was a genuine offer or not but not going through it again!!

pwurple

Yes, you can and it happens. We were gazumped in 2012 and 2013.

georgieM

Happens me 8 years ago. Nice to see estate agents back at it again. Think it's all part of the game.

Larbre34

Yes, this phenomenon is as much to do with greed and chancers in the sellers market as genuine competition of offers.

In all cases demand your deposit back and go very quiet for a while. No one should be tolerate being the eejit in these things.

Anecdotely the supply of cash buyers is, inevitably, dwindling. Dont be lulled into competing for prices in this false pick-up. Dont forget the mortgage issue levels are still seriously restrained so there arent endless purchasers with bottomless pockets.

Shiranui

No Pants wrote: »

Could also just be trying it on, a phantom bid to see if you can pony up some more cash, especially since you just handed over €5k. Ask for your deposit back immediately and say nothing more. Unless you're happy to potentially be the only party in a bidding war.

Thanks for all comment guys

I wonder if I could get a proof that this is not phantom by requesting the other parties paperwork?

ToxicPaddy

Shiranui wrote: »

Thanks for all comment guys

I wonder if I could get a proof that this is not phantom by requesting the other parties paperwork?

Getting a straight answer from an EA is nigh on impossible. Getting them to admit they are chancing their arm.. not a hope.
Best thing to do is get your deposit and walk away. Put it down to a learning experience.

No Pants

Shiranui wrote: »

I wonder if I could get a proof that this is not phantom by requesting the other parties paperwork?

What right would you have to that? Best ask for your deposit back immediately and do not contact the EA again. Let them call you.

Henry Ford III

Shiranui wrote: »

Thanks for all comment guys

I wonder if I could get a proof that this is not phantom by requesting the other parties paperwork?

Your not entitled see that unfortunately, assuming it exists in the first place.

I'd get my deposit back if I were you. Keep an eye on the property to see if it's taken off the market. If not I'd get a solicitor place a new lower bid on your account.

Barely Hedged

Larbre34 wrote: »

Yes, this phenomenon is as much to do with greed and chancers in the sellers market as genuine competition of offers.

In all cases demand your deposit back and go very quiet for a while. No one should be tolerate being the eejit in these things.

Anecdotely the supply of cash buyers is, inevitably, dwindling. Dont be lulled into competing for prices in this false pick-up. Dont forget the mortgage issue levels are still seriously restrained so there arent endless purchasers with bottomless pockets.

Any anecdotes in particular about cash buyers?

Ray Palmer

Larbre34 wrote: »

Yes, this phenomenon is as much to do with greed and chancers in the sellers market as genuine competition of offers.

.

Different form the gazundering people were doing for a few years. You dropping what you are going to pay for a property when approaching the signing date. To me that is much lower on the ethical scale.

Until you buy a property offers can be made. What is the seller meant to do refuse a higher offer when the buyer can walk away at any point? More pragmatic than being greedy or a chancer. Buyers do walk away of fail to get finance in house purchases.

D3PO

its rare but I agree with Ray here. There was little condemnation of gazundering on here when it was rife over the past few years not the shoe is on the other foot.

I don't see why somebody should turn down a better offer to be nice or fair to somebody who could pull out at anytime they want anyway. Either put in a system like Scotland where all accepted bids are legally binding at both ends or live with the fact that gazundering or gazumping will always be part of the market.

marienbad

D3PO wrote: »

its rare but I agree with Ray here. There was little condemnation of gazundering on here when it was rife over the past few years not the shoe is on the other foot.

I don't see why somebody should turn down a better offer to be nice or fair to somebody who could pull out at anytime they want anyway. Either put in a system like Scotland where all accepted bids are legally binding at both ends or live with the fact that gazundering or gazumping will always be part of the market.

So what is the point of deposits then ?

L1011

marienbad wrote: »

So what is the point of deposits then ?

Bugger all. Ensures that you're genuine, that's all.

marienbad

MYOB wrote: »

Bugger all. Ensures that you're genuine, that's all.

Ok, and a handy 5k per buyer back in the day when interest rates were high I suppose. This whole area needs updating though.

Ray Palmer

marienbad wrote: »

Ok, and a handy 5k per buyer back in the day when interest rates were high I suppose. This whole area needs updating though.

Serious? Think about how much interest they get from this money while they are holding it and explain how much money they would make. Do you really think that is the game?

The situation is there due to a historical way this was done but anybody can back out of the sale until signed so people have equal protection

ABajaninCork

Given the interest rates at the moment, the amount that would be accrued would be the square root of bugger all!

johnwd

I don't think that an estate agent would try it on with that phantom stuff - it's not that I think they're saints, it's just that I think that there's fug all in it for them so why would they bother - if they're on 1.5% or whatever of the sale why would they risk the deal for the sake of a few extra quid. I'd say there is either :
a) a genuine offer in that is higher.
b) the owner was never going to accept the price you offered and this is the estate agents way of getting you to stump up the asking.

b would be in the EAs interest allright ... seeing as he was never going to get paid the other way anyways. See, I told you I didn't think they were saints!!

marienbad

Ray Palmer wrote: »

Serious? Think about how much interest they get from this money while they are holding it and explain how much money they would make. Do you really think that is the game?

The situation is there due to a historical way this was done but anybody can back out of the sale until signed so people have equal protection

And that is why I said back when rates were high, around 14/15% in the early 80's.

Gandhi

How long was the property on the market? It is has been sitting there for months it is very suspicious that a bid just happened to come in right after you had shown you were serious.

If it has just come on the market in a desirable area, then it seems a bit more realistic.

L1011

Ray Palmer wrote: »

Serious? Think about how much interest they get from this money while they are holding it and explain how much money they would make. Do you really think that is the game?

The situation is there due to a historical way this was done but anybody can back out of the sale until signed so people have equal protection

In the mid 1980s, holding 2-3k (5k would have been hideous as a booking deposit) for a few months DID accrue a decent amount of interest - the post you quoted said "back in the day". Multiply by multiple houses on the go at the same time and it was very lucrative for agents and solicitors to make the process as slow as humanly possible.

Ray Palmer

marienbad wrote: »

And that is why I said back when rates were high, around 14/15% in the early 80's.

But the practice didn't start in the 1980s more like the 1880s. How much do you reckon they could have made in the 80s with this either way?

It is what it is not a conspiracy to make money off interest

Shedzafew

Whilst this practice is highly frustrating to buyers if I was selling my property I would have no problem giving back the deposit and reopening negotiations.

If I was looking to purchase I would also have no problem withdrawing my offer if the house next door went up for sale and I knew I could get it for 5k cheaper.

This being said I do sympathise with you. The current system has numerous faults that in a large number of cases favour the seller.

D3PO

it in no way favours the seller.

The market dictates who it favours. When the market was down buyers regularly pulled the rug from under sellers the day or week before contracts were due to be signed putting the proverbial gun to their head to take a lower offer.

The system could do with reform but its wrong to say it favours one party over another as things stand its wholly down to market conditions.

Shedzafew

The existing bidding process through estate agents is completely favourable to the seller. There is absolutely no transparency. Estate agents can create fictional bids on properties or quite simply ask one of their friends to put in an offer to drive up the price.

Perhaps when market conditions were poor in recent years buyers had the potential to gazunder but I would very much suspect that the vast majority of this was done by experienced cash buyers who were purchasing BTL properties and not 1st time buyers.

daheff

Ray Palmer wrote: »

Serious? Think about how much interest they get from this money while they are holding it and explain how much money they would make. Do you really think that is the game?

The situation is there due to a historical way this was done but anybody can back out of the sale until signed so people have equal protection

Are deposit funds not held in Client accounts and accrue no interest?

OP- I'd ask for your money back asap. Demand interest if its not paid within 3/4 days.

I'd also send a letter to the owner and tell them whats happened and that you are prepared to reinstate your bid if they want to accept it. If phantom bidding is happening the owner will be onto the EA straight away to find out why a legit buyer is no longer buying. If theres no phantom bidding then you are still in the same place.

D3PO

Shedzafew wrote: »

The existing bidding process through estate agents is completely favourable to the seller. There is absolutely no transparency. Estate agents can create fictional bids on properties or quite simply ask one of their friends to put in an offer to drive up the price.

Perhaps when market conditions were poor in recent years buyers had the potential to gazunder but I would very much suspect that the vast majority of this was done by experienced cash buyers who were purchasing BTL properties and not 1st time buyers.

The bidding process and gazumping/gazundering are two very different things. This discussion is about the latter.

As for Gazundering not being don't by FTB's that's in no way true. You don't need to be an experienced property purchaser to deploy a tactic like gazundering and there were many a FTB who did it.

Many might like to say they didn't gazunder they just "reduced offers due to things found in the survey" (most of which would be completely unreasonable reasons to reduce offers for ) but whatever way they want to paint it weather it was using that as their "reason" or just flat out dropping the offer at the last second it is still gazundering and was widespread.