First time buyer guide
What’s Gazumping and How to Avoid It
What Is Gazumping?
Gazumping happens when a seller who had verbally accepted your offer to buy their home then decides to accept a higher bid from another buyer. It can be very disappointing to lose out on the house you’d set your heart on and, in some cases, leave you out of pocket.
Another form of gazumping is when the seller raises the price at the last minute despite having agreed on a lower price with you before.
Gazumping can take place at any time before you’ve swapped contracts, so timing is crucial. If your survey is taking too long or your solicitor is sluggish the seller may decide to accept an offer from a buyer who can move quicker.
Is Gazumping Legal?
It is legal. Even if the seller has accepted your offer, in order for the agreement between you and them to be binding you need to exchange contracts.
Since the sale process takes time, the exchange of contracts might come about quite late. So you – the buyer – will have spent quite a bit of cash on surveys, solicitors and the like. If you’re gazumped at such an advanced stage in the process you could lose a significant amount of cash.
How Can I Avoid It?
To avoid the dreaded act of gazumping, consider these steps:
With home buyer’s protection insurance you can claim back the money you’ve already spent on buying the home. This includes solicitors, surveys and mortgage arrangements. The seller can’t be stopped from accepting another offer, but at least you’ll be keeping your money safe.
Before making an offer on a property, make sure you have:
- all the documentation needed on hand,
- a solicitor in line, and
- a mortgage agreement in principle.
These will be reassuring to the seller as it shows you can secure the funds and are ready to proceed quickly.
The agreement will be legally binding once the contracts are exchanged. It’s in your best interest to get to that point as fast as you can. Keep in touch with your solicitor and mortgage adviser so that they deal with your paperwork quick.
Ask for the property to be taken off the market
Sellers and estate agents are usually not too keen to take the house off the market. But asking won’t hurt, and having the house unlisted will make you less vulnerable to gazumping.
Consider getting a lock out agreement
A lock out agreement is a contract between the seller and the buyer of a property. It states the buyer’s exclusive right to buy the house within a set period of time. Your solicitor can help you draft one and tell you how much it would cost.
Try to meet the seller
Agents and solicitors usually prefer to avoid contact between their clients, but they can’t really stop you from keeping in touch. Try to get hold of the seller’s email or phone number so you can communicate with them. It’s useful to keep them up to speed on how things are progressing and remind them how much you like their house.
Ask for written proof
If your estate agent tells you that a higher bid has been made on the property you’re after ask for written proof, just in case.
What Can I Do if I’m Gazumped?
Unfortunately, there’s not a lot you can do. You could try making a higher counteroffer and become the gazumper yourself. But, before you do that, make sure you take a close look at your cash and decide if you can afford to bid higher. You don’t want to end up suffering financially. Also, bear in mind that you could be gazumped again.
Being prepared is your best bet when it comes to gazumping. Follow our guidance above to avoid disappointment when bidding for your dream home.