Can I get outbidded after I paid my deposit?

Shiranui · 27-01-2014 12:51pm #1

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 · 27-01-2014 1:01pm

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 · 27-01-2014 1:05pm

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 · 27-01-2014 1:06pm

Gazumping is the term used for this practice.

It was all the rage back in the day.

No Pants · 27-01-2014 1:15pm

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 · 27-01-2014 1:16pm

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 · 27-01-2014 1:18pm

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

georgieM · 27-01-2014 1:21pm

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

Larbre34 · 27-01-2014 1:22pm

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 · 27-01-2014 1:27pm

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 · 27-01-2014 1:30pm

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 · 27-01-2014 1:31pm

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 · 27-01-2014 1:35pm

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 · 27-01-2014 1:38pm

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 · 27-01-2014 2:35pm

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 · 27-01-2014 2:38pm

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 · 27-01-2014 2:40pm

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 · 27-01-2014 2:43pm

marienbad wrote: »

So what is the point of deposits then ?

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

marienbad · 27-01-2014 2:45pm

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 · 27-01-2014 2:51pm

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 · 27-01-2014 2:58pm

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

johnwd · 27-01-2014 3:01pm

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 · 27-01-2014 3:05pm

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 · 27-01-2014 3:10pm

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 · 27-01-2014 3:34pm

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 · 27-01-2014 3:35pm

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 · 27-01-2014 4:09pm

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 · 27-01-2014 4:19pm

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 · 27-01-2014 4:27pm

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 · 27-01-2014 4:29pm

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 · 27-01-2014 4:39pm

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.

BeatNikDub · 27-01-2014 5:50pm

My understanding is that estate agents are legally bound to bring all offers to the vendor as their client.
If the vendor advises to take the higher one, that is what they must do.

Kettleson · 27-01-2014 6:06pm

I couldn't believe that this practice existed in Ireland. I was told by several auctioneers/estate agents that this was a "Gentlemans Agreement" and was common practice in Ireland, Yeah Right! Typical BS.

Nothing is final until the contracts are exchanged, and the money is in the bank, although someone is going to pull me up on that for sure.

What I did when last purchasing a property, was to ask the if we, the vendor and myself "agreed" the sale, then the auctioneers would take the property off the market, which they did, but still meant nothing in real terms. Nothing is confirmed until the conveyancing is complete.

Kettleson · 27-01-2014 6:09pm

BeatNikDub wrote: »

My understanding is that estate agents are legally bound to bring all offers to the vendor as their client.
If the vendor advises to take the higher one, that is what they must do.

Sounds right, but they didn't often do that in practice. I tried to buy 2 properties which were subject to divorce settlement. In each case I offered way over what the properties were eventually sold for. In one case 60K more.

That property was bought by a family member of one of the divorcing couple....

Markcheese · 27-01-2014 8:22pm

If you really think you've dicked about ,do the same back to the estate agent (but you might well lose that house)
Tell the ea that you really want it .. Offer significantly more , go sale agreed (but keep looking around) when everything is nearing conclusion go back with a lower bid ... Alright you'll lose solicitors fees ect if they tell you where to go, but you'll get your estate agent deposit back ..eventually ..

bacon? · 28-01-2014 3:49am

I bought my place back in 2005, I never trusted estate agents, and was sure they were pulling bids out of their a$$.

I got into a bidding war with one "supposed" party. I stopped at 240k, estate agent said they bid 260k... so, I walked.

A couple of days later he rings me back and told me the good news that the other party wasn't interested anymore... he had the cheek to expect 260k! even if this was a real bidder, it should never have counted... anyway, I'm sure they're not all bad, but back when things were crazy, I'm sure there was a lot of fraud going on.

It's crazy that there's no transparancy when dealing with this kind of cash

AngryHippie · 28-01-2014 4:06am

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.

Then when they come crawling back, offer 3 grand less than your original offer.

woodseb · 28-01-2014 8:48am

alot of people here willing to take a moral stand with the OP's money.....

my advice is that it is impossible to second guess the estate agent, it is also quite likely in this market that you were genuinely gazumped

if you still want the property and think its value at above the new bid, by all means make another - in 5/10 years time when you have your home at the price you were willing to pay you won't care for this back and forth with the EA

Frank Black · 28-01-2014 8:59am

As someone has previously posted, at the rates that EA's make off a sale, it's not worth their while trying to invent phantom €5K bids. They just want to close the sale ASAP and get paid. It's almost certain that the €5K bid is genuine, so you need to decide whether to walk or up your bid.

whippet · 28-01-2014 9:03am

woodseb wrote: »

my advice is that it is impossible to second guess the estate agent, it is also quite likely in this market that you were genuinely gazumped

i'd echo this.

It happened to me where we were sale agreed (while no deposit was paid over) and I was contacted the morning I was to pay over the deposit that a new bidder came in at €5k over my offer. That was a friday and I just told the EA to forget about it (assuming that the new bidder was a sham)

But over the course of the weekend I got local knowledge that there was in fact a new bidder (had never even viewed the property) ... from a little more digging it turned out to be a friend of the EA. To cut a long story short what we ended up doing was calling the Vendor directly and telling them what we found out ... came to an agreement that we would match the gazumping price and she would instruct the EA not to entertain any more offers and take it off the market.

We were being used by the EA to set a floor on what the vendor would offer to facilitate their mate. I had words with the EA after all was done and dusted ... but like water off ducks back.

IITYWYBMAD · 28-01-2014 9:04am

Frank Black wrote: »

As someone has previously posted, at the rates that EA's make off a sale, it's not worth their while trying to invent phantom €5K bids. They just want to close the sale ASAP and get paid. It's almost certain that the €5K bid is genuine, so you need to decide whether to walk or up your bid.

That's not necessarily true. I know of cases where EA's were encouraged to get an extra 5-10K on the bais that anything above a certain amount, they would be given a high percentage. It can work well for the EA and the vendor.

My advice, would be to request your deposit back and walk. There is talk of legislation in the spring that will ensure full transparency for situations like this.

daheff · 28-01-2014 9:09am

Kettleson wrote: »

Sounds right, but they didn't often do that in practice. I tried to buy 2 properties which were subject to divorce settlement. In each case I offered way over what the properties were eventually sold for. In one case 60K more.

That property was bought by a family member of one of the divorcing couple....

There is no requirement for the vendor to accept your offer just because its the highest. In a situation like the one outlined above, this would probably have been the best solution to this messy situation for the vendors. Your offer of 60K above may not have resolved other issues the vendors had or would have faced if they sold the property to you

Kettleson · 28-01-2014 3:13pm

daheff wrote: »

There is no requirement for the vendor to accept your offer just because its the highest. In a situation like the one outlined above, this would probably have been the best solution to this messy situation for the vendors. Your offer of 60K above may not have resolved other issues the vendors had or would have faced if they sold the property to you

Sure, but in that case, why put house on the open market at all? only to establish a possible market value and yet sell it for much less? The question was did the auctioneer pass on the offer? And would the other party in the settlement have benefited from a higher sale price? Who won and who lost? Who can say for sure?

I know (well allegedly according to the vendor) in another case that the EA didn't pass on the bid, whether by bad administration or intent, or "Sale Agreed" status.

I got a call directly from a guy who was selling a house and asked me was I still interested because they were just about to go into final stage of their sale. I had already put 2 offers in with the EA.

I said I was no longer interested as I had already moved on another house. But I asked him did he get my second higher offer from the EA, which was higher than the then current highest bid, and he said that he hadn't. (I'm guessing at that time the sale was "agreed" with the other eventual buyer.

Maybe he did get the offer, maybe he didn't, who's to say. But that's the facts from my end. The house I believe went for less than my second offer.

flintash · 28-01-2014 9:34pm

well my last expierance was that auctioneer wouldnt entertain me. i rang next day after bid being accepted and was out of the game. they didnt tell me what the wining bid was and i didnt throw bags of cash over the asking, as it was going litle under the asking.so depends on parties- some are gentleman some not

skimpydoo · 29-01-2014 2:07am

Get a friend to enquire about the property and see what the estate agent says to them.

jon1981 · 29-01-2014 1:52pm

flintash wrote: »

well my last expierance was that auctioneer wouldnt entertain me. i rang next day after bid being accepted and was out of the game. they didnt tell me what the wining bid was and i didnt throw bags of cash over the asking, as it was going litle under the asking.so depends on parties- some are gentleman some not

Agreed, this was my experience too. I remember many times ringing up about a property to be told a bid was just accepted and was never asked if I wanted to submit an offer or my status (cash or mortgage). Perhaps it was the time of the year (October) and the EA didn't want to introduce the possibility of not closing before Christmas and therefore not hitting a target or something.

Kristopherus · 29-01-2014 2:08pm

A deposit usually secures an asset and a contract is in place in pretty much all walks of life, EXCEPT where an auctioneer is concerned. Gazumping is wrong, wrong,wrong, but I cannot see our wonderful govt reforming this "profession" any time soon.:mad:

D3PO · 29-01-2014 2:29pm

Kristopherus wrote: »

A deposit usually secures an asset and a contract is in place in pretty much all walks of life, EXCEPT where an auctioneer is concerned. Gazumping is wrong, wrong,wrong, but I cannot see our wonderful govt reforming this "profession" any time soon.:mad:

but its ok for a tenant to give a deposit change their mind on the rental and get there money back right .... :rolleyes:

or its ok for gazundering by buyers when they can .... :rolleyes:

Can I get outbidded after I paid my deposit?

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