The act of gazumping – means accepting an offer, only to reject it in favour of a higher offer before the contract is completed.
You would be very disappointed. In this article we provide effective suggestions to prevent this.
Additionally, you can refine your property buying process, by learning more about the costs of buying a house in the UK and how to effectively make an offer and negotiate the best price for your dream home.
Why is gazumping a problem?
The conveyancing process begins when your offer to buy a property is accepted by the seller. It ends with you receiving the keys.
As part of the process, once you’ve made the offer to buy the property, you’ll employ a surveyor to conduct a survey to determine the property’s condition.
This usually costs at least several hundred pounds or more for larger or older properties.
Your solicitor will carry out searches to ensure that the property belongs to the seller. These also cost money – both in the solicitor’s time, and in the search fee paid to the Land Registry.
So if the seller drops out of the transaction with you to accept someone else’s offer, you might have already spent a significant amount of money on the buying process. For some people, these lost fees can eat into the deposit for the mortgage for the next property.
The acceptance of your offer is only verbal and conditional. The contract becomes binding at the exchange of contracts stage. That leaves plenty of time for a seller to get cold feet about your offer, or for someone else to make a higher counter-bid.
Is gazumping legal?
As unfair as it may seem, gazumping is legal in England and Wales. That is to say that until the contracts have been exchanged, either party has a right to change his or her mind and make an agreement with someone else.
How to avoid being gazumped
Here are a few suggestions to prevent losing out on your desired property:
Move on the sale as quickly as possible
Conveyancing is long process. No matter what you do, you won’t be ready to exchange contracts right after your offer has been accepted, but the quicker you are in obtaining a survey, conducting searches and agreeing to a final price, the less time there is for someone else to make another offer.
Make sure the property is no longer advertised
As part of a condition of your offer, have the seller not only take the property off the market with the agent, but also have any listings removed from property websites, and the physical 'For Sale' board taken down.
Be as organised as possible
Make sure that your finances are ready and that you have a mortgage in principle. This is a certificate from your mortgagor stating how much they are willing to lend you based on your circumstances.
Prevent the seller from accepting another offer
Consider signing a “lock-out agreement” in which the seller agrees to not seek out or accept offers from anyone else. However, sellers are often reluctant to sign these agreements if they have any intention of gazumping you.
Obtain insurance
An insurance policy will help you cover the initial loss of expenses in case the sale does not go through.
Buy through an auction
Buying a property at an auction removes all risk of gazumping. As soon as the hammer strikes, you are obligated to buy the property and the seller has an obligation to sell to you.
Employ a proactive solicitor
When you are buying a property, there is a lot a solicitor can help you with. But make sure you have a proactive solicitor who will also ensure that you do not get gazumped in the conveyancing process. A solicitor can also be very helpful in guiding you with a lock out agreement and speeding up the entire conveyancing process.
No sale no fee conveyancer
Some conveyancers offer a no sale no fee conveyancing option. You can find out what it exactly means in our article on no sale no fee conveyancing.