What is Gazumping?

‘Gazumping’ normally becomes newsworthy as each property boom gains momentum, as prices start to rise fast. That said, it can happen at any time.

When buying a property in England or Wales, the process follows a well trod path which usually takes 6 to 8 weeks from an initial handshake through to the final moving date. The reason a purchase takes so long is down to several factors. First of all, any purchase of land has to be properly documented, the land and area surrounding must be ‘searched’ by examining local authority registers and the transaction itself must be properly documented and registered with the Land Registry. Furthermore, most purchases will require a mortgage and therefore a third party becomes involved.

In addition, there may be several other transaction linked to your own transaction. After all, the person selling to you is likely to be buying from someone else and so on. If one person’s agreement falters it may result in your own deal falling apart. This is why buying and selling your home is considered to be such a stressful activity!

Gazumping is where a seller that has already agreed a sale with one party is then approached by another buyer and is tempted by a higher or better offer, despite having agreed to accept another, subject to formal contract. If the seller decides to accept the new offer then the new buyer has effectively ‘gazumped’ the original buyer. Apart from the disappointment involved, there is also a risk that the original buyer will have incurred all sorts of costs and charges that he will need to pay. Gazumpers are not popular!

It is worth noting that all Estate Agents are legally obliged to report all offers they receive. Therefore, whilst it is tempting to blame the estate agent, the prudent buyer will take practical measures to protect themselves from the gazump. Whilst there are ‘pre-contract agreements’ available which may have some effect in protecting you from gazumping, in most cases the delays and effort and expense make them prohibitive.

The best way to protect yourself from the risk of being gazumped is to exchange contracts quickly. To do this you must have your mortgage offer ready, insure that your surveyor and conveyancer mover swiftly and submit their local searches promptly - and make sure you maintain a good relationship with your seller! Most people are reasonable and whilst they may feel unable to reject a higher offer, they also need to believe that new offer will happen and is not just ‘pie in the sky’. Even if another offer does come along during the process, as long as you have maintained a relationship with your seller and not delayed along the way, you are still in a strong position to secure the home of your dreams, even if it means upping your original bid.

For more information contact us or call our mortgage advisers on 01628 507477.