What is gazumping?
This is when a seller demands a greater sum from a buyer after an offer is accepted, but before exchange of contracts.
Take the example of an offer being made for £250,000, at asking price. It’s accepted but then some time later another buyer enters the process. They bid higher, and the person who made the first offer is expected to match or beat to second to have any hope of proceeding.
There’s a second scenario where gazumping can also occur. In our example, moments before exchange of contracts the seller demands £270,000. By this stage the buyer has paid for a survey, searches and solicitor fees – so may feel compelled to go ahead even if it’s unaffordable.
Gazumping is considered an unethical practice, but sadly this doesn’t prevent it from happening.
Read about the sneaky estate agent tricks to look out for.
How can you avoid the risk?
As a buyer’s offer isn’t legally binding, there are steps you can take to minimise the chance of falling victim to gazumping:
1. Insist the property is removed from the market.
If your offer is a good one the seller might agree to this to put your mind at rest. Make sure the property is listed as ‘under offer’ on any property sites, and if it’s not ask why.
2. Ensure you’re ready to proceed.
Sellers will be more tempted to accept another offer later on if it’s going to be months before you can sell your current home, causing delays in the process and the potential for a chain to collapse. So at least put your property on the market before putting in an offer.
If your circumstances allow it, sell your property first and either rent or stay with friends. This makes you as good as a first-time buyer who can move quickly.
Read about applying for a mortgage after you have reached 50.
3. Ask to exchange contracts as soon as possible.
Keep chasing and in contact with the estate agent, so they’re fully informed when you can proceed. After all, their seller doesn’t want to waste time showing other buyers around or seeing a sale fall through.
Read our guide to conveyancing.
4. Ask the agent what their policy is.
Some agents don’t allow gazumping. You could even ask for an agreement to be signed saying the sellers won’t accept any other offers.
5. Develop a friendly relationship with the seller.
This might not always be possible, but if they’re keen to sell they’ll be happy to help push the process along. They’ll also be less willing to accept any counter offers if you’re in touch with them.