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Gazumping: how to avoid it

Buying a house ought to be a really exciting experience and, in most cases, the process runs smoothly right through to completion day. There are only a handful of things that could stop you getting there once you’ve had an offer accepted – and one of these is gazumping.

Here we’ll explain exactly what gazumping is, and offer some tips to help you avoid hitting this wall in the home buying process.

Row of houses on left side of a long road

What does ‘gazumping’ mean?

Gazumping is when a seller accepts one offer on a property, but then goes back on this agreement and accepts a higher offer from another buyer, pushing the original buyer out of the sale and back into the market.

Gazumping usually happens because the seller wants to get as much money as possible for their property, but might also occur if the buyer is dragging their heels over any part of the purchase. In this case, the seller might accept an offer from a buyer who is in a better position to complete the sale more quickly.

  • Is gazumping legal?

    The bad news is that gazumping is perfectly legal and can happen at any time before the contracts have been exchanged, without the seller suffering any major consequences, except maybe a mark on their conscience.

    But if the seller accepts a higher offer once the contracts have been exchanged, or pulls out for any reason after that, the buyer can sue them for any losses this causes and may be able to keep the deposit.

  • Will I lose any money if I’m gazumped?

    If you’re gazumped, you’ll lose any money you’ve spent on surveys, or that you’ve paid to your conveyancer for local searches. The only way you’re likely to be able to claim this money back is if you’re gazumped after the contracts have been exchanged.

  • What is ‘gazundering’?

    Gazundering is when the buyer puts in a lower offer, or makes other demands, once the sale price has been agreed. This can sometimes be a cynical move from the buyer, particularly if the sale is time-sensitive or contracts are exchanged on the day of sale. But it can also be out of the buyer’s hands if they’re reacting to something that has happened at their end of the chain, or because of issues that have been flagged in a survey.

When might I get gazumped?

There are a number of reasons why you might be gazumped, including:

  • The seller wants to make more money

    Arguably the most obvious reason for being gazumped is that the seller simply wants to make as much money as possible from the sale of their property. Although you have some recourse if you’re gazumped after the contracts have been exchanged, if the gazumping occurs any time beforehand, there’s not a huge amount you can do about it – other than putting in a second, higher offer.

  • You have a low offer accepted

    Most buyers will make an offer below the asking price, primarily as a starting point for the negotiations. But if you have a low offer accepted, you leave yourself more at risk from being gazumped, as there is a chance someone will come in and offer something closer to the asking price, or even above it.

  • The sale isn’t moving quickly enough

    House sales can be very time-sensitive, particularly if you’re part of a chain and are relying on other sales to go through to help facilitate yours. If the sale is being held up because of a problem in your part of the chain, the seller might decide to accept another offer from someone who is in a better position to buy. Similarly, if the sale is being held up by avoidable delays, the seller might interpret this as you dragging your feet and accept another offer from someone they deem to be a more serious buyer.

How can I avoid being gazumped?

Although there’s nothing to stop a seller accepting a higher offer, there are some steps you can take to reduce the risk of falling victim to gazumping.

  • Be prepared in advance

    The longer a sale takes to go through, the more chance you have of getting gazumped, so it helps to get things moving as quickly as possible. You can put the seller’s mind at rest by agreeing a mortgage in principle as soon as possible - this is a letter from your mortgage provider confirming the amount they are willing to lend to you, essentially confirming that the funds are in place. Also try to appoint a proactive solicitor who is used to dealing with property purchases, and make sure you have all the necessary documentation to hand and ID to hand when required.

  • Get the timing right

    If you need to sell your property before you buy, you need to make sure it’s on the market as soon as possible. Ideally, you shouldn’t make an offer on a property until you have one on the one you’re selling, to make sure timing doesn’t become an issue.

  • Ask the seller to take the property off the market

    As soon as you have an offer accepted, ask the seller to take it off the market. You may find the seller is more receptive to this once you have a mortgage offer in writing. It helps if you can make this legally binding by getting it confirmed in writing, possibly via an exclusivity agreement. If not, there’s nothing stopping the seller from changing their mind. Once agreed, make sure the estate agent removes any signs and online listings on the seller’s behalf.

  • Take out homebuyer’s insurance

    Homebuyer’s insurance is a specialist policy that covers you against the loss of any legal fees, or costs associated with surveys and mortgage lending, should the purchase not go ahead. It won’t make gazumping less likely, but you’ll be better protected financially if it does happen.

What should I do if I get gazumped?

Although there are ways to minimise the risk of being gazumped, there’s no way of making yourself immune to it. If a higher offer does come in, you should first check your finances to see if you are in a position to increase your offer, if that’s what you want to do – you may feel you don’t want to even if you’re in a financial position to do so.

If you do want to make a counter offer, make sure you don’t offer more than you can reasonably afford and try to avoid entering a bidding war.

You could also appeal to the seller’s better nature by convincing them you’re in a better position to buy. If you’re a first-time buyer, not being part of a chain is a definite plus point, as is being as flexible as possible on the moving date. In short, anything you can do to convince the seller you’re the best person to buy their property should be used to help your case.

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