“You’ve been gazumped” is something that no property buyer ever wants to hear. But what does ‘gazumped’ mean? We explain this controversial and often disruptive practice in our guide to gazumping.
FAQs
Gazumped meaning: What happens when you are gazumped?
Being gazumped means that you have your offer to buy a property accepted, but then the seller accepts a higher offer from someone else. This means that your offer is now rejected, and you cannot complete the sale.
Crucially, it will generally happen right at the last moment, meaning that all the time you put into the sale is wasted. It may also cost you hundreds or thousands of pounds in conveyancing fees and property surveys, if they have already been carried out.
Is gazumping illegal?
Gazumping is entirely legal anywhere in the UK. The owner of a property is perfectly within their legal rights to accept any offer before the contracts are exchanged. Similarly, a buyer is allowed to try and outbid someone for any property, right up to the last minute.
Is it fair to gazump someone?
It is legal to gazump someone, but it is widely considered to be an unfair thing to do. However, it really depends on your outlook on the property market, and capitalism in general.
Do estate agents encourage gazumping?
Some estate agents actively encourage gazumping, some discourage it, depending on their gazumping policy. However, estate agents work for the owner of the property, not the buyer. It is their job to try to achieve the highest possible sales price for the owner.
It is also their legal duty to pass on all offers made to the property owner. This applies right up to the point where contracts are exchanged. So, if you want to gazump someone, you can insist that the estate agent passes on your offer, regardless of their policy.
Can you be gazumped in Scotland?
Contrary to popular belief, you can actually gazump someone, or be gazumped, in Scotland. Even though their property purchasing mechanisms are slightly different to those of the rest of the UK, gazumping is still legal in Scotland. However, it is much rarer here, because it involves changing solicitors, bringing added costs and inconvenience into the process.
Should I accept a gazumping offer as a seller?
You are legally within your rights to accept any offer on your property before contracts are signed and exchanged. If the gazumping offer is significantly higher than the original offer, it may prove attractive, even if it delays your sale completion schedule.
You will have to decide for yourself about the fairness of allowing someone to be gazumped.
Is gazumping the same thing as gazundering?
Gazumping and gazundering are not the same thing. Gazundering is when a buyer makes an initial offer on a property, and then changes their offer to a lower amount just before it’s time to complete the sale. This forces the seller to either accept the lower offer or reject it, which means starting the whole process again.
Like gazumping, gazundering is also entirely legal in the UK.
Can I be gazumped after appointing a conveyancer?
Gazumping is legally allowed right up until you exchange contracts on a property. This is when the legal transfer of the ownership of a property is set in stone. This may mean you could be gazumped after appointing a conveyancer and spending significant amounts of money on the searches and surveys required to purchase a property.
How can I avoid gazumping as a seller?
You might think it’s beneficial for a seller to be open to a gazumping offer right up until the sale of their house goes through, but this isn’t necessarily always the case. As a seller, you may also lose significant amounts of money and time if a gazumping offer comes along. This may cause you to think twice over whether to accept the offer, depending on how much higher it is than the current offer you’ve accepted. There’s also no guarantee that the party making the gazumping offer will be more reliable as buyers than those you’re currently negotiating the sale with, so you might consider sticking with your current offer. Once you’ve accepted an offer, ask your estate agent to take the property off the market to discourage any future offers.
Can I insure against gazumping?
Home Buyers Protection Insurance is proving more and more popular for home buyers, as the property market becomes more and more competitive. It can protect you from gazumping and the risks associated with complex chains falling through. If your purchase falls through, the insurance can help to cover some of your legal fees and the associated costs of moving house.
What can you do if you are gazumped?
If you are gazumped, you have three main options:
- Walk away: If you cannot increase your own offer – or don’t want to – you can walk away from the purchase.
- Gazump the gazumper: You can up your own offer, outbidding the other party. Only do this if you are sure that your financial situation is strong enough to accommodate a higher offer.
- Convince the seller: Rather than offering more money, you can highlight your qualities as a buyer. If you are a no-chain buyer, a cash buyer, flexible on moving dates, etc, these are things that might sway the opinion of the seller.
How can I avoid being gazumped?
You can avoid being gazumped by trying to complete the sale process as quickly as possible. Once your offer has been accepted, keep things moving as much as you can.
You could ask the seller to take the property off the market. Make sure all your necessary documents and financials are in order and keep the pressure on your solicitor. The HomeOwners Alliance has some further advice to help you avoid being gazumped.
Is gazumping common?
Gazumping is getting more common in some parts of the UK, such as London. In a recent survery, Nearly a third (31%) of respondents said they had been gazumped and couldn’t complete the purchase. Gazumping in the capital increased by 5% in 2022, compared to three years ago.
However, this is unlikely to be the case across the country. Gazumping is a much more common practice in cities, where the level of competition is higher and the market moves faster.
What are the risks with gazumping?
If you’re selling a property and you accept a gazumping offer, there can be risks attached. If the buyer is offering more than the property is worth, or more than they can afford, there could be a higher chance of them pulling out of the purchase. Accepting a gazumping offer means turning down an offer you’ve already accepted, and if it falls through, you may have lost two potential buyers.
If you’re a buyer and you’re the victim of a gazumping, the risk is that you might have to start your house hunting process all over again. You could also risk getting drawn into a bidding war and agreeing to pay a much higher than you originally planned to.
What is an acceptable under offer on a house?
One way to minimise the risk of being gazumped is to offer a fair price in the first place, and one that the seller won’t want to turn down or risk losing. Depending on the circumstances and market conditions, a good rule of thumb is to offer no lower than 5% or 10% below the asking price. The closer you can offer to the asking price, the higher the chance of a seller being satisfied with your offer and the lower the chance of being gazumped further down the line.
Is gazumping common in a buyer’s market?
Gazumping is more common in a seller’s market than a buyer’s market. When property prices are rising, there’s more competition between buyers, which increases the chances of gazumping. However, when property prices are falling, sellers might be more likely to accept a lower offer and are less likely to hold out for a better offer.
In the UK in 2023, house prices have started to fall, leading to the market favouring buyers. This may make gazumping less common, even though competition for properties in city locations remains high.
If you need to know more about how offers and contracts work, our guide can help. For more general advice on buying a property, check out our 10-step guide.
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