Pocock & Shaw Estate Agents

What is gazumping and how can I avoid it?

Posted on Thursday, August 20, 2020

We know only too well the amazing feeling of finding the home you love, making an offer, and hearing back that it’s been accepted.

What is gazumping and how can I avoid it?

We know only too well the amazing feeling of finding the home you love, making an offer, and hearing back that it’s been accepted.

We’re guilty of getting carried away deciding what colour sofa would work best in the living room and having a look at the best pictures to adorn the walls, sometimes even before a solicitor has been contacted to get the process going. It’s only natural to get really excited, but we want to make sure you know that until you pick up the keys, there are a number of things to keep in mind.

One of these is that, in England and Wales, there’s no law against a seller accepting an offer from someone else even after they’ve accepted yours.

What is gazumping?

Gazumping is when, after your offer has been accepted, another buyer comes into the picture and makes a higher offer than yours.

This could result in one of two things. Either you reconsider your offer and raise it so it matches or exceeds the competing offer, or the seller accepts the higher offer and you need to start your home-buying search again. Even if you go back in with an offer to match the new buyer’s one, the seller may still choose the new buyer, if they’re chain free for example.

Gazumping can happen at any time before contracts are exchanged. It could be on the same day your offer’s been accepted, or several weeks later, when you’re much further along in the buying process.

So in some cases, you could have spent time and money on things like getting your mortgage approved, instructing solicitors, and doing surveys, and still get gazumped.

Is gazumping legal?

As frustrating as gazumping can be, it is legal in England and Wales.

The agreement of the purchase only becomes legally binding once you’ve exchanged contracts. Until that happens, either the seller or buyer could still pull out of the deal.

You may have noticed some properties on Rightmove marked as “Sold STC”. This means Subject to Contract, so in theory, the sales of those properties may still fall through.

In Scotland, the system is different as there are binding contracts, known as the missives, which are signed much earlier in the process, usually right after an offer has been accepted verbally. So, before the missives are signed, you could still be gazumped, but the practice is less common there because of how early these contracts are usually signed.

How to minimise the risk of being gazumped

We wouldn’t wish the experience of being gazumped on anyone. So here’s what we recommend you do to strengthen your position and protect yourself from the risk of it happening to you:

1. Be prepared and move fast

All sellers want the sale of their home to go through as quickly and with as little hassle as possible.

Obviously, the quicker you are at finalising the approval of your mortgage, getting the surveys done, etc. the sooner you’ll exchange contracts.

Have your Mortgage in Principle ready, and your solicitors instructed, before making an offer on your new place. And if you depend on the sale of your present home in order to buy the next, have it on the market, and preferably only make an offer once you’ve already accepted one for your property.

2. Show your enthusiasm to the sellers

Don’t underestimate the human factor in this process.

The estate agent is usually the one representing the seller, but once an offer has been accepted, make sure the sellers know that you’re excited about buying their home, and that you mean business.

It could be that if the seller sees how keen you are in making the sale happen, they’ll be less swayed by other offers.

I’ve been gazumped. What should I do?

It’s important that you keep your cool.

You should have a clear understanding of where you stand financially. If you’ve worked out the maximum you can spend on a property, make sure you stick to it. If you get carried away, you could put yourself in a difficult situation further down the line.

And bear in mind that if you come up with a higher counter offer, there’s still a chance that you could be outbid again, so you’ll have to draw a line somewhere.

Try to strengthen your position by highlighting all the advantages of selling to you. Maybe you’re not in a chain, so the sales process would be faster and smoother with you.

Or perhaps you are flexible with dates and will be able to accommodate a schedule that works better for the seller.

And going back to a previous point, if the seller knows how much you love their home, and how excited you are about buying it, this could work in your favour. So make sure they know that.

 

Source: Rightmove