There’s all sorts of different jargon used in the property industry, but one of the strangest words has to be gazumping. This isn’t something you want to happen to you if you’re buying a property, so we’ve detailed below what it is and whether it’s legal in the UK.
What is gazumping?
Simply put, gazumping is when a seller accepts a higher offer on their property, despite having already agreed verbally to another offer.
This can obviously be devastating for the initial buyer, who then finds themselves back at the beginning of their property search. They may also lose out on money already spent on fees.
Is gazumping legal?
Unfortunately gazumping is legal in the UK. Even if a sale has been verbally agreed, estate agents are obligated to pass on any further offers to the seller.
Written contracts for property sales don’t usually happen until after surveys and legal checks have been carried out. This means there can often be several months between the verbal offer and the written contract being in place. It is during this time that buyers can end up being gazumped as nothing is legally binding at that stage.
How to avoid being gazumped
As a buyer, there’s no guaranteed way of avoiding gazumping but there are several things you can do to reduce the risk of it happening.
The key thing to sort out before you even start looking at properties is a mortgage in principle. This is a conditional offer made by a mortgage lender that they will ‘in principle’ give you a loan up to a specified amount. Having this can really speed up a property sale a lot, it shows the seller that you’re committed to buying and have the funds necessary.
Looking in advance at conveyancing solicitors will also help to speed up the process. They will handle all the legal aspects for you when buying a property. Getting quotes and researching who you may want to appoint in advance of putting an offer in on a property will also help to speed up the process. Any payments to the seller will go via the solicitors, so if you’re prompt in getting the money to them, they should then hopefully be prompt in getting it through to the seller, too.
There are some checks that you will want to carry out on the property you wish to buy first, such as arranging a survey. This can take time, so if you research surveyors beforehand and try to get this completed quickly, this is one less opportunity for gazumping.
Make an agreement
You can ask the seller to take the property off the market once they’ve accepted your offer. Try building a good relationship with them and work to get to the exchange of contracts as soon as possible.
Ask their agent
It may also be worth checking whether your seller's agent has a policy on gazumping. This means they require the seller to turn down any offers made after the initial acceptance.
Get an exclusivity agreement
An exclusivity agreement (also known as a lock-out or preliminary agreement) is a binding agreement in which the seller agrees not to negotiate with any other parties within a fixed period, for example a month.
This allows the buyer to arrange their mortgage etc. without fear of being gazumped.
The way these normally work is that both the buyer and seller agree to pay a deposit (e.g 2% of the property price). This means if either side tries to back out of the sale or change the price without good reason, their payment is forfeit to the other party.
The written agreement should list the things which would allow for an alteration, such as problems with the survey.
Home Buyer Protection Insurance is available from specialist providers. It's an additional cost to factor in to buying a property, but one you might be glad of if the worst should happen.
What is gazundering?
This sounds similar to gazumping but is rather different. In this instance, the seller is left in a bad position rather than the buyer. Gazundering is when a buyer waits until the almost completion of a sale, before withdrawing their offer and offering a lower amount. The buyer is relying on the seller accepting the lower offer to avoid starting the sales process again from scratch.
Buying and selling property can seem like a minefield, but that’s where we come in! We’re local experts, here to help advise and make the process as smooth as possible for you. Get in touch with your local branch today if you're looking to buy or sell a property.