What is gazumping? And how to avoid it!

What is gazumping and how to avoid it

Imagine you’ve had your offer accepted. A few day, while still on cloud 9, the seller’s estate agent calls to tell you their client is going with a different offer. Gazumping can really put a damper on those champagne bubbles.


Most people wrongly assume that having their offer accepted means the deal is done and they’ll shortly be moving.


Sadly, buying a property isn’t as straight forward as we’d believe. There are many hurdles to overcome and the worst, by far, is gazumping.



What is gazumping?

Gazumping is when another party makes a higher or better offer on the property you’re in the process of buying that then accepted by the seller. This act forces you out of the purchase, meaning you’ll back to square one.


It’s different from gazundering, which sometimes people confuse the two.


Gazumping can take place at any point in the process, right up until you’ve exchanged contracts. The verbal agreement between you and the seller isn’t as watertight as the agent might have you believe.


There are many reasons why it occurs. Some sellers want the maximum amount they can get for their property. Other might be convinced that a buyer is taking too long and a different party, who’s offering more can progress quicker.



What is ghost gazumping?

While in the normal circumstances there’s a better offer on the table, in ghost gazumping the agent or seller decides they can squeeze more from you without a solid reason. You might see this as the estate agent lying to you but usually it’s the client who is demanding a price increase.


They might have calculated that the market has risen or seen a similar home sell for more than what you agreed. In any case, always ask for written proof. You just might call their bluff and be able to continue with the purchase.



avoid gazumped



Is it legal?

Sadly, gazumping is legal. Again until contracts are signed, you have at best a weak verbal agreement. It’s the reason agents used the term “STC” or “subject to contract”. Until both parties are legally bound, the agent and seller are able to entertain any and all offers.


As you don’t exchange contracts until you’re almost at the end of the sales process, many buyers who are gazumped, also get stung by fees. By the time a buyer has been gazumped, they could have paid for a survey, completed the mortgage application process and have started the conveyancing process.



Can you avoid being gazumped?

There’s little you can do to stop the seller accepting a higher offer. However, you can insure yourself against the downsides with home buyer protection insurance.


While having insurance won’t protect you from having to start again, should you be gazumped, you will be able to claim back some of the fees you’ve paid for. This is good news if you’ve already paid a mortgage broker, surveyor and any other costs you’ve paid for.


Typically, a home buyer protection insurance policy costs around £60 and is valid for 120 days. Many insurance companies, including Sure Wise offer buyer protection products, so it’s worth shopping around for the best price and terms.



stop gazumped



Can you make gazumping less likely?

Putting money to one side for a moment, there are steps you can take to make gazumping less likely.


Be ready

One of the biggest ways to ensure you will be gazumped is to start your property search with everything in a mess. Instead, be smart and get your ducks in a row!


Firstly, get your documents in order. Sort out your bank statements, payslips and ID and store them in a single file.


Next, talk to a mortgage broker and get a mortgage agreement in principle. This proves that you’re mortgage worthy and you have a sensible budget. You’ll also want to have a solicitor lined up and ready to go.


Having all of these in place ensures you can move quickly when your offer is accepted.


Stay on top

Inaction can leave the seller open to higher offers and can even kill the buying process. So, it’s in your best interest to exchange contracts as soon as possible.


By staying in weekly contact with your mortgage broker and conveyancing solicitor, they’ll want to keep the process moving as they will feel the pressure to perform.


Another way to keep the process moving quickly is to reply to emails and call that day. If you can drop off documents that day rather than posting as this will keep the pressure on and the process moving.


Befriend the seller

Saying no is easier if you don’t have a relationship with the other party. And while the agent might want you to avoid contacting the seller, there’s nothing stopping you.


Building a positive relationship with the seller can help prove that you’re serious and able to move quickly. It’s up to you how you stay in touch, many prefer emailing rather than calling. However, it’s worth keeping the seller informed at every step.


If you can, send them a thank you card to their new home!


Ask for the property to be removed from the market

This can be as popular as a lead balloon with agents, not to mention the seller’s reaction! However, it’s always worth asking if the agent will stop advertising the property.


As the home is no longer being marketed, the chance of higher offers being submitted is significantly reduced. If you can combine this with another action, for example, having a survey, you’ll prove to the seller that you’re willing to move quickly.


Ask for an exclusivity period

If you’re seriously worried about gazumping then ask the seller to sign an exclusivity agreement (sometimes called a lock-in or preliminary agreement).


This binding agreement set out a period in which the seller agrees to not accept other offers. It also gives you breathing space to complete the purchase without the fear of being gazumped.


Typically both buyer and seller agree to pay a deposit (usually, 2% of the property price). Should either side try to back out or change the price without a good reason, they forfeit their payment to the other party.


It’s worth asking the seller directly if they would consider such an agreement and having a solicitor on hand that can advise and draw up a written agreement.



stopping gazumping



What to do if you are gazumped

Even if you’ve done everything to avoid being gazumped, there’s still a slim chance of it happening. Don’t panic as you still might be able to purchase that property.


Firstly ask for proof of a better offer. If the agent can’t provide a letter then they’re trying to ghost gazump you. Should they be able to prove there’s a higher offer on the table then you’ll need a plan.


The worse step you can take is to immediately raise your offer. Firstly this could over-stretch your finances and could even lead to you being gazumped again.


Of course, if you have flexibility in your finances and can match or slightly exceed the higher offer than consider if this is the right step.


If you can’t raise your offer then you’ll need a different approach.

  • Are you days away from being able to exchange contracts?
  • Can you be flexible on moving dates?
  • Do you have an emotional reason for buying (e.g. dream family home, expecting a child or divorce)?


Whatever your reason, try to communicate directly with the seller and explain why you love the property and how it will change your life. It’s best to write or email them and then try to follow up over the phone or face to face.


If a property is worth it, you’ll find a way to deter anyone who wants to gazump you!



Stopping gazumping for good

When Sajid Javid was The Communities Secretary, he announced a call for evidence to improve the experience of house buying and selling, making it ‘cheaper, faster and less stressful.’


One of the central aims of this research is to overhaul is gazumping, with ministers discussing ways to make it less likely.


While we will have to see what the government proposes, hopefully, they will look to streamline conveyancing and surveying processes, making buying a property much faster and make gazumping gone for good.