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What is Gazumping?\r\n

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According to new research from Comparethemarket, the leading reason for property sales falling through is gazumping.\r\nOver the past year, nearly two-fifths of buyers admitted they had successfully secured their home by outbidding another offer. Of those that tried to buy in the last year but had their purchase fall through, gazumping is the reason for 38% of failed transactions. Three-quarters of prospective house-buyers would consider gazumping if their dream home was already under offer with another buyer. \r\n\r\nOver the past year, 38% of house-buyers paid above the property’s asking price to secure the deal, paying more than £16,000 on average.\r\n\r\nGazumping is currently legal in the UK as the ‘agreement of purchase’ only becomes legally binding once contracts have been exchanged. \r\n\r\nThe survey shows that 68% of people would support a law that made gazumping illegal or ensured better protections are in place to prevent this from happening.\r\n

What is gazumping?\r\nGazumping occurs when a seller accepts a verbal offer on the property from one potential buyer but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute after previously verbally agreeing to a lower one. In either case, the original buyer is left in a bad situation and offers a higher price or loses the purchase. \r\n\r\nWhen the owner accepts the offer on a property, the buyer will usually not yet have commissioned a building survey, nor will the buyer have yet had the opportunity to perform recommended legal checks. The offer to purchase is made “subject to contract”, and thus until written contracts are exchanged, either party can pull out at any time. It can take as long as 10–12 weeks for formalities to be completed, and if a higher offer tempts the seller during this period, it leaves the buyer disappointed and out-of-pocket. Asking price has no impact on whether a property will be “gazumped”, but location does; it is more common in London and the North East. Accepting any offer over a previous offer is known as gazumping.\r\n

Is Gazumping Legal?\r\nShortly – yes. As unfair as it might feel, the truth is that gazumping is a perfectly legal aspect of the property-buying process in England and Wales. The reason for this is that an agreement to buy or sell a property doesn’t become legally binding until written contracts are exchanged, and until then, neither party can be held to a prior verbal agreement.\r\n

How To Avoid Gazumping?\r\nGet insured. You can insure yourself by taking out home buyer protection insurance. If the sale falls through because the seller changes his mind or accepts another offer, you’ll be able to claim back some of your conveyancing fees, survey fees and any other costs you may have had to payout.\r\n\r\nHave your finance lined up, such as a mortgage in principle, in advance, a solicitor lined up, and all of the necessary documentation to hand. \r\n\r\nAsk for the property to be taken off the market as soon as your offer is accepted. Try and make it a condition of your offer. The seller or agent doesn’t have to agree to this, but you are unlikely to be gazumped if they do.\r\n\r\nThe quicker contracts are exchanged, the less chance there is you will be gazumped. Once contracts are exchanged, the agreement is legally binding, so you want to get to that point as quickly as possible. Ensure that your case doesn’t fall by the wayside, and respond promptly to requests for information.\r\n\r\n \r\n\r\nAsk that the property be taken off the market as part of making your offer. If the property is no longer being advertised, there’s much less chance of a higher offer being made and you being gazumped. \r\n\r\nKeep the seller informed with where you’re up to in the process so they can see that you’re actively trying to move things along. If you get along and see you’re a severe buyer, there’s less chance of them ditching you for a better offer. \r\n\r\nAsk the seller to enter into a lock-in agreement or exclusivity agreement under which they agree not to negotiate with another potential buyer. A lockout agreement is a contract between the seller and the buyer stating that the buyer has the exclusive right to buy the property within a certain period.”, “_content_area”: “field_5e725ef86b9c3”, “content_area_call_to_action_text”: “”, “_content_area_call_to_action_text”: “field_5eb2d79c7babc”, “content_area_call_to_action_link_type”: “”, “_content_area_call_to_action_link_type”: “field_5eb2d7a37babd”, “content_area_call_to_action”: “”, “_content_area_call_to_action”: “field_5eb2d7907babb”, “content_area_center_content”: “0”, “_content_area_center_content”: “field_5e78e9263c629”, “add_valuation_form”: “0”, “_add_valuation_form”: “field_5ec96c71fa54e”, “background_colour”: “theme-light”, “_background_colour”: “field_5ec50a7ea8ba5”, “add_top_spacing”: “0”, “_add_top_spacing”: “field_5eb94ffbe5568”, “add_bottom_spacing”: “1”, “_add_bottom_spacing”: “field_5eb950231ca34”, “bottom_spacing_size”: “section-padding-bottom”, “_bottom_spacing_size”: “field_5eb9502e1ca35” }, “align”: “”, “mode”: “edit” } /–>