When you’ve found your ideal property and put an offer in, you’ll probably be crossing all of your fingers that the sellers will accept this.
And when you hear that they have, you’ll be thrilled. But what if someone else decides to offer a higher amount for the property – will the sellers be able to accept this instead?
This morally dubious practice is known as gazumping and can see you left out of pocket for legal or surveyors fees you’ve already paid, with no property to show for it. According to conveyancing site My Home Move, gazumping has been on the rise over the last few months, suggesting it’s something that buyers should be aware of. Let’s see what it all means, and find out if there’s anything you can do to stop it.
It is worth saying that this article applies to England, Wales and Northern Ireland only. The home buying process is different in Scotland. Although you may have to pay some upfront fees to your solicitor and lender, if your offer is accepted then you are pretty much certain to be able to complete the purchase.
What is gazumping?
Gazumping is when a seller accepts one offer from a buyer and then accepts another higher offer after this. This means that the original buyer either has to put in an even higher offer to retain their claim on the property, or lose it to the new buyers. It’s something that happens in areas where there’s a high demand for property, so sellers can afford to call the shots to get the best price for their houses.
If you’re a buyer, gazumping can particularly be a problem if it happens after you’ve already paid for a survey or your solicitor’s fees. That’s what happened to one couple recently, who spent £1,400 on broker’s, survey and solicitor’s fees for a property they’d had an offer accepted on, only to lose out when someone else had put in a higher offer. If this happens to you and you only had a relatively small deposit saved up, it could mean you’d have to delay buying for several months more while you managed to save up the amount you’d spent on fees.
What can you do?
There’s nothing you can do to stop a seller accepting a higher offer after they’ve already accepted yours. It’s perfectly legal, although it may not seem fair. Some estate agents will agree with this, so if gazumping is something you’re worried about, you can look specifically for agents who have a clear and open policy on sellers accepting more than one offer.
To minimise the chances of gazumping it helps to get a ‘mortgage in principle’ from your lender. This will help speed up the time from having your offer accepted to exchanging contracts – and the faster the better as there’s then less time for somebody else to come in with a higher bid.
You could also ask the seller to take the property off the market as soon as they’ve accepted your offer. This would also help to highlight any sellers who might be holding out for a higher offer – if they’re unwilling to take the property off the open market, they’re likely to be open to gazumping so it might not be worth wasting your money on survey and solicitor’s fees.
Disclaimer: All information and links are correct at the time of publishing.BACK TO BLOG HOME