As a buyer you want to be able to enjoy the process of buying a property, you want to be able to celebrate and start furniture shopping as soon as an agreement has been made. Although you should look out for gazumping and how this can set you as a buyer back in the process of buying a property and if there are potential ways you may be able to prevent it.
What is Gazumping?
According to Stephen Maunder gazumping is, “when a seller accepts your offer on a property, but then backs out after accepting a higher offer from a different buyer.”
Gazumping could happen to anyone, but it is usually more common when there is more demand for a property as multiple buyers are competing against each other for their dream home.
Getting gazumped could cause you some distress as not only will you lose the property you were looking but you will lose the money that you have spent on applying for the mortgage which is not ideal!
Is Gazumping legal?
Gazumping isn’t illegal in majority of the UK says EQUIFAX, because the initial agreement to buy and sell a property isn’t binding until contracts have been exchanged. This just means that the seller or the buyer has the chance to change their mind and pull out of the deal at any point before the exchange.
Legally estate agents are obliged to pass on any offers that they receive to the seller. This means even if an offer has already been accepted the agent has to let the seller know another offer has been made, and this can lead to gazumping if the agreement hasn’t been legally agreed the seller can change their mind.
Is there any way of trying to ensure that Gazumping doesn’t happen to you?
Purchasing a property is usually a long process and getting so close to securing your dream property to be gazumped is disappointing but there is no guarantee that this will or will not happen to you.
Although there are a few ways that you can try to prevent it. These include the following:
- You could consider getting a mortgage in principle – this shows that you can borrow enough to buy the property.
- Present yourself well – to reassure the seller you aren’t likely to drop out of the agreement.
- Keep the seller up to date on the process of the paperwork – just to show them that you are keen on the property.
- You could deal with an estate agent that has a policy against gazumping – so you have no worries of this happening to you.
- Once you have made an offer you could ask the agent to change the online listing and 'for sale' board to say, 'under offer'.
- You could also tell the estate agent that your offer is subject to them taking the property off the market.
What should you do if you are Gazumped?
If you get a call or a message from the estate agent to say that someone else has made a higher offer than you, do not worry you may still have a chance of securing the property. For example, sellers would maybe rather go with the buyer who will complete the sale quicker, as time is more important than money for some sellers.
If it still doesn’t look positive you could always consider increasing your offer to something higher than the new buyer. Although do not feel under pressure into increasing the offer if you can’t afford it. If you miss this one another property might become available that could be better suited to you and your financial situation.
Also, you don’t know for sure if the other buyer is going to 100% follow through with their purchase. So, keep in touch with the agent so they can let you know if the sale doesn’t go forward.
If you are becoming a property owner, we think you should know everything before you make any decisions. Why not find out more and get in contact with one of our Mortgage Experts today @Mortgagepropeller