What is Gazumping?
Well, it’s not very nice, that what gazumping is, as you are looking this up it has probably happened to you or someone you know. Gazumping is when you as a buyer have had an offer accepted on a property and the seller accepts another offer from someone else before the exchange of contracts.
Not only do you find yourself in a position where you have lost your house purchase, you could also be out of pocket on surveys or any other fee.
Is gazumping legal?
Yes unfortunately it is, is it morally correct? Well, that’s a different question.
The good thing is we are not in a market where it happens a lot; when house prices were rocketing it did.
Your property purchase will not be binding until you exchange contracts, which occurs very late in the process after your solicitor has done the searches, confirmed the finance etc you are normally looking at six weeks until you exchange contracts and much longer if you are in a chain, prior to exchange of contract you just have a verbal agreement.
You may turn your anger upon the estate agent, but they are just doing their job, whilst the house is on the market they have an obligation to put forward all offers they receive.
The term gazumping is an old Yiddish word that means to overcharge, but sometimes it’s used in other situations, for example, the seller may accept another offer because the people are in a better position than you.
How to avoid being gazumped.
Get all your ducks in a row – we recommend that you make sure you can act quickly
- Sort your mortgage out in advance.
- Undertake the research on which solicitor you will appoint in advance.
Ask that the seller takes the property off the market as a condition of your offer, they probably will and doing this does help as it installs a frame of mind that prevents talking to anyone else, but it will not 100% stop gazumping from happening and it’s not binding.
You can consider a lock-in agreement where both parties agree not to negotiate with another party or back out of the sale for an agreed period, if you do you will forfeit to the other party an agreed deposit, these, of course, will cost money, but given the market conditions when gazumping happens a lot it may be worth having one.