What is gazumping?
Gazumping one of the more controversial aspects of the home buying process. Think of it as the pariah of the property market.
It refers to a situation where the seller accepts a more attractive offer from an alternative buyer.
But, there’s a lot more to it than that. Time to dig a little deeper…
So, what exactly is the gazump definition?
If you’ve been gazumped, another interested buyer has put in a higher offer on the property – after your offer has been accepted. Higher prices are usually more attractive to sellers – thus potential buyers lose the home.
Many things can go wrong with property purchasing, but this is one of the main causes of heartbreak for expectant homeowners. A seller accepting another offer can feel like a betrayal. All legal fees for the buyer, such as for conveyancing solicitors, can be completely wasted. Going back to square one and having to take on the property market again is a position no one wants to be in.
Is gazumping legal in the UK?
So, is gazumping legal in England and Wales? Unfortunately for some buyers – yes. While it sounds like a very underhand way to operate, it’s relatively commonplace.
The sale doesn’t become legally binding until contracts between you and the seller have been exchanged. So, hopeful buyers can be left disappointed.
Gazumping in Scotland
In Scotland, property law manages the process in a different way. By simply making an offer for a property, you’re committed to following through with the purchase.
This means that once an offer is accepted on a property in Scotland, further offers cannot be considered. Gazumping is only possible following a survey, which reveals specific repair costs and a purchase price reduction can then be sought.
How to prevent gazumping
How can you ensure your dream home won’t slip out of your grasp?
Often, an offer is accepted on a house but it stays on the market. But, the estate agent is perfectly within their rights to do this until you and the seller are both legally contracted to the property transaction by exchanging contracts.
In fact, they’re obliged to try and get the best deal possible for the seller. Put yourself in the agent’s position. Should a buyer be unable to complete the purchase – it’s in the seller’s interests to keep marketing the property.
Even if you’re buying a house privately, the seller may choose to keep marketing their home, as a better house offer might be received.
Buying a house is stressful to say the least! However, there are some ways to prevent gazumping.
Ensure you’re the only buyer
One way to prevent gazumping is to remove all competition! Clearly state that you would like the seller to cease all marketing on the property when you put in your offer.
A seller might be reluctant – but if you don’t ask you don’t get.
While this may not be a legally binding request, it clearly lays out your expectations, and will make it harder for the seller to go against your wishes as things proceed.
Equally, if a selling agent does not keep to this, they may be in breach of Ombudsman rules, depending on which scheme they belong to.
Take out gazumping insurance
You can also take out home buyer protection insurance to protect you if you’re gazumped.
This often covers any house survey fees and other associated costs you may have paid out during the process.
While this is an additional expense, you may decide it’s money well spent, particularly if you have had to compete with other buyers to secure a property.
Keep communication open
As with all property purchases – communication is key.
Being reliable in the house buying process will make you much more attractive to sellers, and being responsive is one way to prove this.
Unsure how it’s done? Here are some top tips:
- Keep your communications clear and be easily contactable
- Demonstrate that you’re prepared by having a mortgage agreement in place
- Have your deposit saved and ready to go
- Find a solicitor
- Keep all parties regularly updated on what you’re doing to progress the purchase
- Get to know the seller. If there’s a relationship between you, it might make them less likely to gazump you on moral grounds
You want to reduce all potential delays which could allow another buyer to sneak in and gazump you while you’re sorting your admin out! If necessary, behave as if you would in a contract race – while ensuring you don’t rush into the sale before your ready!
Having your affairs in order will also reassure the seller that you’re clearly committed to purchasing the property, making them less likely to look for alternative buyers.
If you come across a delay or problem, it’s best to explain this to the seller, rather than simply avoiding calls from their agent. A free flow of information between all parties is key when managing the purchase process.
Lock out agreements
Remember – this doesn’t necessarily guarantee a sale. But, it makes gazumping less likely.
If you’re paying more than you would have liked for the property, push for this agreement to be included.
In return for this, don’t be surprised if you’re asked to pay a non-refundable deposit. You will need to get your solicitor to draw this up and handle the payment, if applicable. It could be worth your while if the property is proving popular.
Be wary of raised prices
Be aware that some rogue estate agents will try and force the price of the property up at the last minute, by telling you someone else is placing an offer. If this happens, always ask to see evidence of the other offer and request they confirm this to be the case in writing.
Don’t take anything at face value!
If there’s genuinely another offer, don’t immediately raise yours. Evaluate your options. Have a serious think about what you can afford and if you want to raise your offer.
If you do raise your offer, be prepared to be gazumped again. If someone is willing to try and steal your dream property from you, there’s a chance they will do it again.
This is where a good relationship between buyer and seller could come in handy, as you can appeal to them. Lay your cards on the table, detailing why they should stick with you as the buyer.
Most sellers want a quick sale. So, don’t drag your feet.
When you exchange contracts – the sale becomes legally binding. Try to get to this point as quickly as possible by ensuring all your finances are in check and keeping open communication with your solicitor.
Staying on top of things will help push the sale through faster!
What to do if you’re gazumped
Clearly, putting in an offer on a house is just the start of the process.
If the worst does happen, what can you do about it?
Make another offer
Of course, you could make a counter offer. Essentially, you can gazump the person who gazumped you!
But, it’s not quite as simple as that. Don’t rush into this without seriously considering what you can afford and how much you like the property.
One important piece of advice is to stick to your maximum limit. Making an offer on a house is one thing, but going above what you can afford is another.
Change the seller’s mind
Here, the relationship between buyer and seller will be everything.
Trying to show yourself as the more attractive buyer might help you prevent the sale falling through.
Think of anything you can use as leverage! Perhaps you’re a first-time buyer and therefore aren’t in a chain. Or, maybe you’re flexible and willing to agree to a moving date that suits the seller.
Of course, there are no guarantees this tactic will work. But, it’s always worth trying, especially if you’re certain this is your dream home.
What is gazundering?
In a similar vein, there’s also a practice known as gazundering. This is another highly controversial topic in the world of property.
Gazundering is when a buyer makes a last-minute reduction to their offer price, usually just before the point of exchange. It may be that the market has declined in the time between agreeing the deal and reaching the point of exchange, and the buyer simply wants the purchase price to be representative of local market conditions.
If you’re the buyer in this scenario, make sure you have done your research and have evidence to support a price reduction of this nature.
Alternatively, it could be that a buyer is simply trying to ‘pull a fast one’ in order to save some money, which may be a harder case to argue with the seller and their agent.
In many circumstances, the seller will want to complete their sale and may find it hard to say no or contemplate starting the process all over again. But, be warned, they’re unlikely to take kindly to being held to ransom in this way.
Neither gazumping or gazundering are currently illegal, although both issues are currently under investigation by the government as part of its review of the housing market. So, as things stand, you need to be prepared to stick to your guns if you’re affected by either.
Getting your affairs in order will reduce your chances of being gazumped, as will enlisting the help of a good conveyancing solicitor. If you need one, we can help. Get your free quote here.