Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .

Legislative Assembly for the ACT: 2003 Week 9 Hansard (28 August) . . Page.. 3376 ..

I move:

That the Assembly takes note of the paper.

Debate (on motion by Mrs Burke ) adjourned to the next sitting.

Civil Law (Sale of Residential Property) Bill 2003

Debate resumed from 26 August 2003, on motion by Mr Stanhope:

That this bill be agreed to in principle.

MS TUCKER (3.35): This bill proposes substantial changes to the way that people buy and sell houses in the ACT. The initial motivation for the bill was the reportedly increasing incidence of gazumping. It is not surprising that gazumping increases when the market is so tight. In many ways, it is an expression of a larger number of people competing strongly to buy each house. Although I am not aware of good statistics on the incidence, one property lawyer has told me that it is really quite rare.

Gazumping is generally regarded as an immoral or unethical practice. It arises in situations in which a verbal agreement has been made between a seller and buyer, usually via the real estate agent. In sale by private treaty, that agreement is usually the cue for the agent to stop actively marketing the property and for the buyer to organise building and pest inspections, if they wish, and otherwise check out the property more thoroughly before they finalise their finances with their bank.

The buyer is gazumped when, following this verbal agreement, another buyer offers a higher price, the seller accepts and the original buyer is faced with the choice of either increasing their offer or losing out, usually losing out. It leaves the buyer who believed that they had an agreed contract bereft and likely out of pocket following paying for inspections, a lawyer's work or something similar.

How does this happen? In the ACT, this verbal contract is not binding. Even where a good faith deposit is requested by the agent-commonly $1,000-it is technically obligation free and will be fully refunded if the buyer backs out. Legally, the seller is bound to go ahead only when contracts are exchanged with the assistance of each party's lawyers.

Some people view gazumping as simply what happens when a lot of people are keen to buy, even desperate to buy, and it is just the agent doing the best by their client, the person selling the house, in getting the highest price they can. In this view it is unethical for the agent not to accept a gazumping offer or to be open to such a thing. There can be a bit of fine line with this competition between potential buyers in a market where it is likely for there to be a number of people willing to go above the advertised requested price.

Sales methods such as by negotiation, in a way, make the most of this higher market without the illusion that there is a price that will definitely get you accepted if you meet it. As the ACT market has gone up, more sales have been conducted in this way and by auction.

Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .