Buying a house can be one of the most exciting chapters in your life, however, there are a few things that may get in your way, and gazumping is one of them. Most people will feel relieved once their offer has been accepted, elated in most cases, but unfortunately, gazumping could occur and send you straight back to the beginning of your home-moving journey.
Not only can this be an extremely upsetting situation, but also frustrating due to the amount of time that may have been spent and now wasted, leading up to this part of the process.
In this blog, we’ll look at what gazumping is and some tips on how you can try to avoid it.
What does ‘gazumping’ actually mean?
Gazumping refers to when a seller accepts an offer on a property, but then goes back on this agreement due to receiving a higher offer from another buyer, pushing the original buyer out of the sale and back into the market.
Gazumping can happen if the seller is very keen on getting as much as money possible for their property, or if the buyer is taking too long with the purchase and dragging their feet. In this situation, the seller may decide to accept an alternative offer from a buyer who is in a better position, for example, a cash buyer, with the hope of a quicker sale.
Another situation where gazumping could occur is if you have a low offer accepted, as this leaves you more at risk of being gazumped and there’s a chance someone could come along and offer the asking price or perhaps even over.
Is gazumping legal?
Unfortunately gazumping is completely legal and something which could happen at any time before the contracts have been exchanged. There will be no significant consequences for the seller, except perhaps a bad conscience!
However, once contracts have been exchanged it’s a different ball game. If the seller were to accept a higher offer or pull out for any reason post-exchange, then the buyer may be in a position to take legal action and sue them for losses.
Will I lose money if I’m gazumped?
Disappointingly in most cases the answer to this is yes. You’ll lose any money that you’ve spent on surveys or local searches carried out through your conveyancer. There’s no way of claiming this back unless you’ve been gazumped after the contracts have been exchanged.
What is ‘gazundering’?
In opposite fashion to gazumping, gazundering occurs when the buyer puts in a lower offer, or makes other demands, once the sale price has been agreed. This could be a distasteful move from the buyer if they know that the sale is time-sensitive and that they may be able to get away with a lower price due to the seller not wanting to delay things further.
However, it could also be completely out of the buyer’s hands if they have no choice due to something that has happened on their end of the chain, or perhaps issues have been flagged in a survey.
How can I avoid being gazumped?
There’s no 100% foolproof way to ensure that you won’t be gazumped, as there’s no law in place to stop a seller from accepting a higher offer, however, we’ve put together some top tips you can take to help reduce your risk.
Eliminate unnecessary delays
A slow sale may be one of the reasons why you could find yourself being gazumped, therefore it’s important to eliminate unnecessary delays and get things moving as quickly as possible. Having a mortgage in principle in place will put your seller’s mind at ease, and make sure to choose your conveyancers wisely so you know you’re in good hands.
Another way to ensure a speedy home move is to use YouConvey. Not only will a dedicated home mover adviser walk you through the process from start to finish, but we’ll do all of the chasing for you, shaving up to 8 weeks off your home move, making your experience quicker and much less stressful.
Timing is key
You want to make sure that you’re good to go, so if you need to sell a property to buy a new one, make sure it’s on the market as soon as possible. If the property you’re interested in is a competitive one with lots of interested potential buyers, then you may want to ensure you have an offer on your property, to put yourself in the best position possible so that timing doesn’t become an issue.
Ask the seller to take the property off the market
Once you’ve had your offer accepted, there’s nothing to stop you from requesting for the property to be taken off the market. If the seller is serious about the sale and you have your mortgage in principle in place, this shouldn’t be an issue. Make sure that the estate agent removes any listings and signage too.
Take out homebuyer’s insurance
Homebuyer’s insurance is a specialist policy that will cover you against the loss of any costs associated with surveys, mortgage lending and legal fees if the purchase does not go ahead. Although it can’t protect you from being gazumped, you can cover your back financially which offers some reassurance.
What should I do if I get gazumped?
As we’ve discussed, although you can do certain things to try and avoid being gazumped, there’s no way of protecting yourself completely. If you do find yourself in this situation, you should assess your financial situation and decide if you want to increase your offer. That’s only if you want to of course, you may decide that even though you could offer more money, the situation has changed your mind and you’d rather walk away.
If you decide that you do want to increase your offer with a counter offer, make sure that you don’t offer more than you can afford, and try to avoid a bidding war where possible.
Alternatively, you could also reach out to the seller and try to appeal to them personally. If you feel like you can convince them you’re the better buyer then there’s nothing stopping you from doing so. Perhaps you’re a first-time buyer with no chain slowing things down, or you’re flexible with your move-in date etc. After all, it’s worth a shot!
We hope this blog post has given you some helpful information, and if you’d like any further information about moving house, get in touch for a friendly no obligation chat.