Why gazumping is way less funny than it sounds.
Gazumping is a funny word, but trust us, getting gazumped is no laughing matter.
If you’ve had a verbal offer on a property accepted, that’s the end of the story, right? Not quite.
A property sale is only legally binding once you’ve exchanged contracts. Before then, there’s technically nothing to stop someone swooping in and making a higher offer which turns the seller’s head. If that happens, you’ve been gazumped.
In a word: nope.
Once you’ve had an offer accepted on a property, it’s ‘sold STC’ (subject to contract), but until the exchange date, it’s open season if another buyer wants to make a cheeky bid.
There was some talk that gazumping could be made illegal back in the early 2000s, but this never materialised.
It’s a little different in Scotland, where gazumping is legal but rare, owing to the fact solicitors conduct the sales process and play by different rules.
As the exchange of contracts happens late in the home buying process, there is every opportunity for gazumpers to pounce.
If a gazumper likes a property that’s already under offer, they’ll get in touch with the estate agent and ask when the bid was accepted. They may ask details about the seller’s situation, such as whether they’re close to exchanging on their next home.
Often, you’re more at risk of being gazumped if you’ve taken a long time to get your survey and mortgage done, or your solicitors are slower than a tortoise.
If the seller gets impatient, the lion will be waiting and ready to gazump the gazelle. Once they’ve pounced with an offer, often above asking price, the seller will have a decision to make.
While every estate agent will have a different view on gazumping, they’re obliged to pass on information about any offers. And remember, agents work for the seller, so getting the maximum price is in their interest.
Here are some of the ways you can mitigate the risk of getting gazumped:
Getting gazumped can be tough to take. Just when you were dreaming of your new home with freshly painted walls and a sheepskin rug, you’ve had the rug pulled from under your feet.
By this point, you’ll have already spent money on surveys, solicitors’ fees and arranged a mortgage, so it’s a bitter pill to swallow. So what should you do if you fall victim to the gazumpers?
First, try a charm offensive to persuade the vendor that you’re the best person to sell to. If you can move quickly, this could be your trump card even if your offer is lower. Alternatively, you can decide to lick your wounds and make a counter-offer, provided you have sufficient funds in reserve.
Sadly, if you’re unable to out-bid the gazumper, you may have to vacate the field. One consolation is that if you have Home Buyers’ Protection Insurance, you can make a claim to cover some of your losses.
Sometimes the boot is on the other foot. Gazundering is where the buyer drops their offer at the last minute before contracts are signed. This leaves the seller in a vulnerable position where they have to decide whether to accept the lower offer or start the process again.
It’s important to distinguish between gazundering and the altogether more reasonable practice of reducing an offer following a survey which has highlighted costly repairs. Gazundering refers to a more cynical attempt to lower the purchase price for no justifiable reason.
How can you make a winning bid on a house? Read the Nested guide on making offers.
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