Gazumping it the term used when someone selling a property accepts a buyers offer, but then changes their mind and accepts a higher offer from a different buyer. The first buyer got gazumped and must now consider raising their offer or giving up and looking elsewhere. This can be financially and emotionally draining for potential buyers that lose out. It’s common practice in the UK, more than a fifth of buyers experience gazumping.
Brighton is the UK’s gazumping capital with 34.9% of offers being gazumped. Here’s a chart showing the areas most at risk of gazumping:
Is Gazumping Legal?
Gazumping is legal in England and Wales but prohibited in Scotland. The sale agreement is not legally binding, either party can pull out at any time. Only after the seller and buyer exchange contracts is the sale legally binding.
Even after an offer has been accepted, estate agents (in England and Wales) are legally obliged to inform sellers of any new offers made on their property.
Can the seller accept more than one offer?
The seller can accept more than one offer. Sellers can start a contract race, this is where a seller has accepted two or more offers on a property and will sell to the buyer that is ready to exchange contracts first. Once a contract race begins, the seller’s solicitor must immediately inform all potential buyers. Sounds exciting, but it can be costly for the buyer that comes second and the seller doesn’t even have to sell his property to the buyer that is ready first anyway.
What should you do if you’ve been gazumped?
You have three options:
- Make a higher offer (Gazump the Gazumper)
- Match the higher offer and request a contract race
- Keep in touch with the seller or agent an hope that the 2nd offer falls through
- Give up and look for another property to buy
How to avoid being gazumped
By failing to prepare, you are preparing to fail. There are a few things that you can do to prevent gazumping or protect yourself from it:
- Once your offer has been accepted, contact the seller and their agent and insist that the house be taken off the market (get a written agreement). Also ask about their policy on gazumping.
- Make it a fast sale – if you’re serious about buying the property, quickly get property checks carried out and get a conveyancer ready to proceed. The quicker you exchange contracts the less time there is for another buyer to interrupt.
- Keep in regular contact with the seller to make sure the sale proceeds smoothly and build trust with the seller.
- Consider a pre-contract deposit agreement or a exclusivity agreement. This will ensure that the seller won’t consider other offers before the exchange of contracts, but it may require some extra legal costs.