paperwork signing for gazumping

Gazumping is a common issue that can arise during the house-buying process, often leading to delays, frustration, and the risk of losing the property you’ve had your heart set on.

But what exactly is gazumping, and is there any way to prevent it? In this blog, we’ll explain what gazumping is and share tips on how you might avoid it in the future.

Gazumping explained

Definition: Gazumping occurs when a seller accepts an offer from one buyer, only to later accept a higher offer from another, leaving the original buyer in the lurch.

This can happen at any point between the initial offer and the exchange of contracts, making it a common and frustrating experience for buyers who thought they had secured the property. 

Is gazumping legal?

Although frustrating, gazumping is legal. An offer only becomes legally binding once the contracts are exchanged. Until that point, the seller can accept a higher offer, even if you've already made one. While it may feel unfair, especially if you've spent money on surveys and valuations, gazumping is entirely legal.

How does it happen?

The process typically unfolds like this:

  • The first buyer makes an offer, and the seller accepts it.
  • Before the contracts are exchanged and the deal is finalised, a second buyer makes a higher offer on the property.
  • The seller decides to accept the higher offer, effectively pushing the first buyer out of the deal and taking the property away from them.

How common is gazumping

Gazumping is becoming more common, especially in areas where there are lots of buyers but not enough properties. This is often the case in the southern parts of the UK, where demand for homes is high but supply is low.

How to avoid gazumping

Be prepared

Staying organised and prepared is crucial at every stage. Make sure you have a clear offer, with all details outlined, and that your solicitors are ready to be instructed. Also, it can help to know the type of survey you need and have your finances in place.

Ask for the property to be removed from the market

To avoid the risk of another buyer making a higher offer, ask the seller to remove the property from the market once you've had your offer accepted. This can help to protect you and avoid the chance of gazumping.

Get to know the seller

Take the time to get to know the seller and build a rapport. A strong relationship can make them less likely to accept another offer and help strengthen your position, making it easier to close the deal.

Consider getting a bridging loan

One common reason for being gazumped is being stuck in a long property chain. Whether you're waiting for an offer on your current property or for the seller to complete on their next home, a long chain increases the risk of last-minute offers. This can be especially frustrating if you've spent money on surveys, solicitors, and valuations, only to lose the property.

A solution that may help in this situation is a bridging loan. If you're waiting for your current house to sell to release funds for the purchase, this option can provide the support you need. It essentially turns you into a cash buyer by quickly releasing the necessary funds, which may help you minimise the length of the property chain and increase your chances of securing the property. This is known as chain-break bridging.

It's important to note that while this is an option, it can be more expensive than longer-term solutions. So, it's best to consider this solution only if you're confident you can repay it and if the property is one you have your heart truly set on.

Summary

Gazumping is a real issue that can occur at any point before contracts are exchanged, leaving buyers in a tough position. However, there are steps you can take to reduce the risk, such as being well-prepared for the purchase, building a strong relationship with the seller, and considering a bridging loan which may help you secure the property more quickly. 

Loans are secured against property. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.