Looking for a new home can be a long and tiring process, so when you finally find your ideal property, it’s easy to imagine living there before you have secured it for yourself.
In scenarios like these, you will probably want to move quickly, put an offer in as soon as possible and do everything you can to ensure that home is yours.
But, unfortunately, things are not always smooth sailing. In some cases, another buyer might put a higher offer in, despite the seller already accepting your offer, in a bid to ‘gazump’ you.
This can create a bidding war, and in some cases, you might end up paying much more than the original asking price just because you’re desperate for that property.
We have broken down everything you need to know about ‘gazumping’.
What is gazumping?
Gazumping is when a seller accepts your offer on a property, but then abandons the sale after receiving a higher offer from a different buyer.
it usually occurs when there is high demand for a certain type of property, or property comes up for sale in a sought-after area – resulting in potential buyers competing for the new home.
Gazumping can not only be disappointing, but it can also leave you out of pocket if you have already spent money on applying for a mortgage, property surveys and conveyancing.
Is gazumping legal?
In most parts of the UK, gazumping is legal. This is because the initial agreement to buy and sell a property isn’t legally binding until contacts have been exchanged.
This means both the seller and the buyer have the option to pull out of the sale at any point before the exchange. Exchanging contracts is one of the last stages of buying a house, so this can leave buyers feeling let down if they get gazumped at the last hurdle.
How reduce the chances of getting gazumped?
- Secure a mortgage in advance
To reduce your chances of getting gazumped, you should consider getting a mortgage agreement ‘in principle’. This will show the seller that you are a serious buyer and prove you can borrow enough to afford the property.
- Get the seller to take the property off the market
When you make an offer, tell the estate agent your offer is subject to the property being taken off the market, with no more viewings conducted. Although this isn’t a legal requirement, if they refuse, it could indicate that the seller is still hoping for more money. In highly competitive markets, you may even consider asking to draw up an exclusivity contract.
Under this type of contract, you may pay the seller a few, in exchange for sole rights to negotiate over the property for a set period of time. It is advised you get a solicitor to do this for you as it can become complex.
- Stay on good terms with the seller
By staying on good terms with the seller, they may be less likely to accept another offer. Get documents signed on time, and do everything on your side to make the sale go smoothly.
What should I do if I get gazumped?
If the estate agent informs you that you have been gazumped, it may not be the be-all and end-all for getting your dream home. In instances like this, you can often highlight to the seller anything you have in your favour.
For example, you’re a chain-free first-time buyer, a cash buyer who doesn’t need a mortgage or have already sold your property so you can proceed quickly. In some cases, time is more important than money, and if the seller wants a swift sale, they may still want to stick with you.
However, if this isn’t the case, but you still want the property, you could consider increasing your offer to match or meet the new buyer – if you can afford it.
However, avoid getting wrapped up in a bidding war, and paying more than the property is worth just to win. You also shouldn’t feel pressured to pay more than you can afford as it can have long-term implications – and your monthly mortgage payments will be higher.
Remember, if you miss out this time, there will be other properties to suit you that come onto the market, and it may be worth waiting it out until the right one comes along.
Meanwhile, there’s no guarantee the other buyer will actually go through with their purchase, their house sale may fall through or they may decide to go with another property. Keep in touch with the estate agent so they can let you know if the sale falls through.
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
To make a start on the next step in your property journey, get in touch today to book a consultation with a member of our team. Call us on 0113 218 5727 to find out how we can help you.
