Gazumping is when your offer to buy a home has been accepted, but the seller accepts a new offer from a different buyer instead. This leaves you without your dream home and can mean you’re out of pocket.
How does gazumping work?
Gazumping can happen at any point up to the exchange of contracts. It usually happens when the seller accepts a higher offer, even if they have agreed to an offer already.
There could be other reasons why the seller accepts another offer. For example, if they are looking for a quicker sale and the new buyer has no chain.
What happens if you are gazumped?
If you are gazumped, it can be a very distressing time. Not only do you miss out on the home you had your heart set on, but you may have spent money that you can’t get back.
There may have options at this stage:
If the new offer is for more money, you want to increase your offer. Don’t be pressured into this. Make sure you can afford any extra and that it’s worth it for you.
Let the seller know what makes you a good buyer. If you’re not in a chain or can be flexible on dates, it may make you a more attractive option.
If you don’t manage to win the property back, you can at least be prepared for next time.
Is gazumping legal?
Yes, unfortunately, gazumping is legal. It can happen right up until the exchange of contracts (when the sale becomes legally binding).
It’s not very ethical to do this. When your offer to buy a property is accepted, you start to invest your time, energy and money into that process. It can be very disappointing if the sale falls through and you have to start again.
Is gazumping possible in Scotland?
Gazumping is still possible in Scotland, but it’s much less likely. Many estate agents in Scotland are also solicitors and are bound by the Law Society of Scotland’s guidelines.
In Scotland, once an initial offer has been accepted, the solicitor isn’t allowed to accept a further offer.
It is possible for the seller to change to a new a solicitor to accept a new offer.
What is gazundering?
Gazundering is a little different to gazumping – but can be just as disruptive.
Gazundering is when the buyer reduces their offer last minute, just before exchanging contracts.
This puts pressure on the seller to accept it as they risk losing the sale. If they are in a chain, refusing the lower offer could mean the chain collapses.
Like gazumping, gazundering is legal, but it isn’t very fair and can be unethical tactic from the buyer to save money.
How to avoid gazumping
Have a Decision in Principle
Time is of the essence when trying to avoid being gazumped. One way to speed things up is to make sure you have a valid Decision in Principle before you make an offer.
If your DIP has run out by the time you make an offer, it may delay things to get a new one.
Request the property is taken off the market
When you ask the seller to take the property off the market, it is less likely to get offers from new buyers.
Arrange a conveyancer quickly
Arranging a conveyancer in advance can help you buy a home more quickly. Give yourself time to shop around for quotes before making an offer.
Once this is sorted, reply quickly to any requests and keep in contact with them to chase up progress.
Home buyer protection insurance
Home buyer protection insurance can’t stop you from being gazumped. It can reduce the financial impact on you if it happens. It lets you claim back some of the costs you may have incurred should the worst happen.
The content on this page is for reference and is not financial advice. For impartial financial advice, try MoneyHelper.