'Gazumping' may be back in town

Although the tendency of “gazumping” may have diminished among property sellers across Dubai in the past few years, real estate agents are taking no risk. Sellers are now being asked to sign an agreement, or memorandum of understanding (MoU) whereby they agree to close the deal when the agreed price and terms are met and face penalties if they renege on their contract.

Will Jones, Dubai Sales & Leasing Director, Elysian Real Estate, told Emirates 24|7: “With the market being governed and controlled by Rera, agencies should be using the forms implemented by them to stop certain sellers from suddenly upping their prices once they have agreed a selling price with their agency.

He advises that each seller has to be qualified correctly and differentiated from someone who is actually looking to sell their property or just seeing what it is possibly worth.

“Making sure sellers are qualified properly and also having the correct forms filled out should eliminate any chances of an owner suddenly increasing their prices. This being said, you cannot always pre-empt everything and it occasionally does happen, in this instance the only person to lose face unfortunately is the real estate broker.”

Gazumping involves a seller pulling out of an agreed sale after accepting a second, higher offer – or asking for more. The term was first coined in the UK in the late 1980s and early 1990s when property prices were buoyant.

Most of the time the sudden rise in price is usually down to the seller listing his/her property with a number of real estate agencies. A buyer may approach the same seller through different agencies, letting the seller think he has a mass of interest from different parties, usually resulting in the seller upping the price to get the best offer.

Gregory Antioch, Head of Residential Sales, Cluttons Dubai admits that the seller is perfectly within his rights to increase the price if he has not entered a MoU with the agent.

“If this happens before the MoU is signed there is nothing we can do as nothing has been agreed and the vendor is perfectly within his or her rights to do so. If how ever the MOU is signed then it is a binding contract and there fore the vendor will face a stiff financial penalty,” he adds.

Rera CEO Marwan bin Ghalita recently said the number of transactions registered at the department had already increased in 2011, with the Director-General Sultan Butti bin Mijrin expecting the total transactions this year to eventually cross 2010 figure. Total transactions registered at the department in 2010 was Dh120 billion.

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