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Gazumping, what's it all about?

Gazumping is the word used in the house buying process when a seller accepts a purchaser's offer, and then subsequently goes onto accept a higher offer for the property from another person. This effectively means the purchaser who made the original accepted offer has been gazumped.

Here we explain Gazumping in more detail and discuss possible ways of reducing and minimising the risk of being gazumped, and offer further help and advice should you be looking for mortgage, or remortgage funding.

What is Gazumping?

Gazumping, a wonderful word for an odious practice! Gazumping is one of two very unusual sounding and closely related words in the house buying process, the other being gazundering. As we identified during the introduction, Gazumping is the terminology used when the seller of a property has accepted a purchaser's offer, but subsequently accepts an increased offer for the property from another person.

The consequences of gazumping are that the original purchaser is now left with two choices:

  • To increase his offer over and above that of the second buyer, or
  • Lose the property!

The problem revolves around those three little words "subject to contract". As a purchaser you may well have done all in your powers to effect an efficient purchase transaction. You may have spent hundreds of pounds in the process too, including valuation and legal costs, only to be left in a frustratingly emotional state, because until contracts have been exchanged, you will have little or no redress.

Can I avoid being gazumped?

Unfortunately not entirely. However, it is possible to take certain steps to minimise the possibility of being gazumped as we discuss in the next section.

Reducing the risks of being gazumped

Whilst there is always a risk of gazumping taking place, there are measures that can be taken to avoid the risk of being gazumped.

  • Choose a vendor whose Estate Agent has an anti-gazumping policy. Here the agent gets the vendor to agree not to accept further offers once an offer has been agreed.
  • Keep in regular contact with the vendor's Estate Agent, and keep them informed of the progress of the transaction, for example advise them when the property valuation is to be instructed, and when you've received your mortgage offer.
  • Act fast! Do whatever you can to speed-up the process. The quicker the sale proceeds, the less chance there is of the vendor pulling out!
  • Consider drawing up an Exclusivity Agreement in which you have exclusive rights to the property, provided that you achieved exchange of contracts within say a 4-week period.
  • Take out insurance cover in case you are gazumped!
  • Once your offer has been accepted, try to insist that the property is taken off the market, and the "For Sale" sign is replaced with a "Sold" sign.
  • You could look into arranging a 'Lock In' agreement. These types of agreement are not too common and can be expensive, but at a very stressful time they could provide you with some peace of mind. Basically both parties will agree to pay a deposit, usually 2% of the purchase price. If either party decides to change their minds about the sale during an agreed period or attempt to change the purchase price without good reason then they lose their deposit to the other party or sometimes a charity may be agreed upon. Lock In agreements are also known as 'Lock Out' Agreements, and 'Preliminary Agreements' and usually last for ten days, starting from when you receive the contract, and not from when the offer is accepted.

What to do if you've been gazumped?

In the unfortunate event that you should find yourself having been gazumped, you should let the Estate Agent know that you remain very interested in the property, and to advise you if the new purchaser pulls out for any reason.

Further mortgage help and advice

Hopefully, we've managed to answer any questions you might have had about gazumping, and let's hope it never happens to you! If you think we might be able to help you with a mortgage or remortgage, why not call us on Freephone 08000 282 281, our lines are open 7 days a week, from 8am until 10pm, or contact us online anytime, we'd love to hear from you!

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

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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.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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