For anyone looking to purchase a property, gazumping can be extremely problematic. To find out more about this practice, and what you can do to limit the chances of being gazumped, read on…
What is gazumping?
Gazumping is the term used to describe a situation whereby an offer for a property has been submitted and accepted, but the seller then receives – and accepts – an offer from another buyer. The second offer is usually higher than the original offer.
Why is gazumping a problem for people looking to buy a property?
When an offer has been accepted, most buyers will commence the process of completing the sale – they pay for a survey, start the legal process, finalise their mortgage offer, and so on and so forth. If the buyer is then gazumped, then they will lose the funds they have spent on these services.
In addition, gazumping is also disruptive. For example, the buyer may have made plans to leave their current property as soon as their offer was accepted – except now that sale has fallen through.
This could mean that the buyer loses the buyer for their property, or if they are renting, a new tenancy has to be agreed.
Is gazumping legal?
Yes, gazumping is completely legal as the sale is not finalised until contracts are exchanged. In fact, estate agents are required to submit further offers if a prospective buyer requests that they do so.
How can you avoid being gazumped?
There is no definitive way to avoid being gazumped entirely, but there are a few things you can do to make it less likely:
- Be prepared to act quickly. The quicker you can finalise a sale, the less likely it is that you will be gazumped. Take the time to browse Conveyancing Supermarket to find a conveyancing solicitor and go through the first stage of applying for a mortgage – known as a Decision In Principle or Mortgage Promise – before starting to browse for properties. Having these things in place will make sure that you can act swiftly if you find a property that you want to buy.
- List your own home for sale before you begin looking for properties. It can feel risky to put your own home on the market before you have decided on a property, but doing so can help you find a buyer – and thus be ready to move home relatively quickly – if you find a property you wish to buy.
- Ask for the property to be removed from the market. When you have found a property, ask the seller to remove it from the market and change any signs outside the property to “SOLD (STC)”. The STC stands for “subject to contract”.
- Consider a “lockout” agreement. Your conveyancing solicitor can help to arrange a legal agreement that – with the seller’s agreement – gives you exclusive rights to buy the property within a certain period of time.
There’s no doubt that being gazumped is an incredibly difficult experience that any buyer will want to avoid – and hopefully the above will allow you to do just that.
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