There are few greater feelings in the house buying process than when your offer gets accepted. It feels like just a matter of time until you’ll be moving into your new home, and there’s nothing that can stop you now. Unfortunately, that isn’t the case; you need to watch out for Gazumping.
Gazumping is when someone makes a higher offer on the house you are in the process of buying, and this offer is then accepted. This pushes the original offer off the table and can leave you back at square one in the search for your dream home.
The most common reason for gazumping is simple: the seller wants to receive the maximum amount of money for their home. There are other causes, however, such as timing.
Gazumping can occur if the process is going too slow for the seller. Perhaps you’re taking too long to have a survey, or your solicitor is dragging their feet. The seller may decide to reject your offer and accept one from a buyer who is in a position to move in quickly.
Is gazumping legal?
While it may seem unfair, and often it is, gazumping is legal. The agreement between you and the seller does not become legally binding until contracts have been exchanged, which can leave a long period where buyers are in danger of gazumping.
Since the exchanging of contracts comes late into the sales process, you’re at serious risk of being left out of pocket. You could have spent money on surveys, legal fees and perhaps paid your mortgage advisor for arranging your mortgage.
What should I watch out for?
You’ll often see properties listed online as ‘Sold STC’, meaning an offer has been accepted but the sale is still ‘subject to contracts’.
This type of listing can actually attract gazumpers who are looking to push you out of a sale. It could be worth asking the seller to take the listing down after they’ve accepted your offer, although this is completely up to them. There’s no guarantee that you’re safe from gazumping even with the listing taken down.
How can I avoid being gazumped?
Firstly, you could get insured. There’s nothing you can do if the buyer decides to take a higher offer than yours, but that doesn’t mean you have to lose out. Look into Home Buyer Protection Insurance and you could claim back some conveyancing fees, survey fees and any other associated costs you might have paid out.
You should also get to know the seller. Being a faceless entity won’t do you any favours when buying someone’s well-loved home. If you can show that you’re serious about buying the property and prove that you love it as much as they do, they’ll be less likely to accept a different offer than yours. It’s also worth keeping them in the loop on your progress so they can see that you’re actively trying to move things forward.
Buyers and sellers’ solicitors often discourage their clients from contacting each other, but there’s no harm in exchanging email addresses or sending a quick thank you card! Just note though that your lawyer can’t communicate with the seller, and vice versa, so just stick to direct contact with the seller, not their lawyer!
Lastly, be prepared to move quickly. Like we’ve said before, you’re more like you get gazumped if you’re moving too slowly through the legal process. Make sure you have your mortgage in principle ready to go and a conveyancer lined up. After that, you should focus on getting contracts exchanged as soon as possible. Muve recommends using its Fast service for a rapid exchange to mitigate the risk of gazumping.
Of course, you can always gazump your gazumper! But be very careful not to overstretch your finances, and always be aware that you could be gazumped again, as bidding wars are very unpredictable.