avioding being gazumped?

I didn't think the market in N.S.W was going well enough to worry about better offers. Maybe things are turning over there?

In any case; it's irrelevent. If you are buying as an investment then you are buying on the numbers, right?

If someone offers more than you, they are either buying for their PPoR, or investors who can't crunch numbers as good as you.

You, as an astute investor, buys on facts, crunches numbers and uses NO emotion; you simply shrug your shoulders, put the cheque book back in your pocket and keep looking, right?

You need to get into the habit of working out your offer based on the numbers that will work for you, put in ONE offer and walk away if it's not accepted. Pretty soon agents will know you are serious and this is how you do business and the games will stop.

There is a "deal of the century" every 5 mins.

I don't know that there is a clause you can insert into the contract to stop this in NSW, but try it anyway. The worst thing the agent and the Vendor can say is no. But they want to sell, you don't need to buy.

Yes, it is a pathetic system in NSW. Many people use the cooling off period after contracts exchange to organise inspections etc, which of course does not leave much time. And you could spent a ton before getting all your due dilligence done, and then it gets sold to someone else. A lot of it is due to the large percentage of shonky real estate agents too, but one of the better ways to minimize an agent peeing in the vendors pocket and telling them to 'accept' other buyers offers is to be confident in your discussions that you have finance preapproved (which I would recommend anyway in NSW) and come across as a genuine and confident buyer. That will minimise you being 'gazumped'. All the best.  Why not buy in Vic, SA or Tassie as a sidepoint?

Are you saying that in NSW you can be gazumped AFTER the contract is signed by both parties?

Wylie

I am a bit confused about what you mean by "exchanged". A purchaser asks an agent to write up a contract, they take it to the vendor. If the vendor signs the contract it becomes a binding contract, signed by both parties. If the purchaser has added say a  finance clause, then the only way the contract can be voided is by using that finance clause, or the cooling off clause. My understanding (in Qld) is that the vendor cannot void the contract, only the purchaser. So you have a certain amount of time to get your finance or building inspection done without risking losing the house. Maybe different in other places. I am sure England has very different rules from watching Location Location Location and other shows.

Of course, if the vendor crosses out the purchase price and changes it to a higher price, then the contract has still not been signed by both parties at that higher price, so in the process of trying to get the vendor and purchaser to agree on a price, the property is still available to be sold to another purchaser. This is what I call gazumping, slipping in a higher offer before the contract is signed by both parties, even if a verbal agreement has been reached. It has happened to us, and we have also done it. It is not unusual, especially if two agents are both trying to get the sale.

This is exactly how we bought our last IP. The purchaser put in a contract, the vendor altered the amount and before the purchaser had decided to sign at the new higher price, we put in a contract which the vendor agreed to. (In our case, the other purchasers were developers and quite possibly would not have increased their price anyway, but who knows.)

My family member who used to sell houses, would say that in this case, (at least in her office) both contracts should have been presented to the vendor by the office principal (to avoid any vested interest in promoting one offer over the other) so the vendor could decide which one they would sign, if any. I know this is the moral thing to do, but not everyone follows the same rules. In our case I don't know if the other party ever got a phone call to say there is another offer and asking them if they cared to increase their offer.

So is "exchange" when both parties have signed off on the contract?

We also had a situation ten years ago where we offered $155K for a house listed at $153K. We signed the contract at about 5pm and didn't hear anything until after 9pm. Our phone calls were fobbed off. We were told later that even though our cash offer of $155K had been signed by the vendor (which made a watertight contract) another well known local flipper had put a contract of $154K in and was trying everything to have our contract overturned somehow. He brought his solicitor into it apparently. Luckily the rules were followed and we got the house. An unethical agent (and they do exist) could have told us we missed the house but I suppose that would have raised the risk of us asking for our contract back, which would have shown it had been signed by the vendor, and he no doubt was not prepared to do so, or was too ethical to bow to the pressure this other purchaser (and solicitor) was putting him under.

Some of the stories I have heard from my family member about how some agents operate would perm your nose hairs.

Wylie

In NSW the vendor and the purchaser agree to a price verbally first. The vendor already should have had a contract prepared by a lawyer previous to putting the property on the market. When an agreement reached between the two parties, the two lawyers exchange the contract, that is when the contract signed by the purchaser.(usually a few days pass) But the contract is not legally binding yet. There is a cooling off period of 7 days (I think). During the cooling off period both parties can change their minds. If a purchaser gets a better bargain somewhere else or the seller gets a better offer they are within their rights to terminate the contract. Usually if there is an agreement most of the agents would tell to new prospective purchaser that the house is under offer and most of the deals go through without problems. I personally think this system is better then the WA system but probably the majority people here think differently. If you purchase at an auction then there is no cooling off period.