What is Gazumping and is it Legal?

Written by Martha Lott Reviewed by Emma Lunn

22nd Nov 2019 (Last updated on 29th Sep 2023) 5 minute read

Why Does Gazumping Happen?

A buyer might be gazumped if:

• The seller accepts a higher offer on the property
• The seller thinks the buyer is taking too long to exchange contracts (i.e. because they have not yet sold their existing home)
• The rival buyer can exchange contracts more quickly

It can be disappointing being pushed out of a sale you thought you’d been accepted for. This is especially so if you’ve already paid for the survey and conveyancing fees and have arranged a mortgage. For reasons like these, gazumping is universally frowned upon.

Is Gazumping Illegal?

Gazumping is not illegal in England and Wales. However, data from Market Financial Solutions revealed that 80% of people are in favour of legally banning gazumping.

The agreement between you and the seller does not become legally binding until the contracts have been exchanged. Until then, the property is listed as ‘Sold STC’ which means the sale is still 'subject to contract'. As the transaction is not yet legally binding, another buyer is not breaking the law by providing the seller with an alternative offer.

Gazumping is often considered unfair and immoral as the original buyer will have paid for surveys and conveyancing searches. They will also often be emotionally committed to the purchase by this stage.

Some property experts are calling for the introduction of “home reservation agreements” in a bid to stop gazumping. This scheme would mean both the buyer and seller paying an additional fee once the sale has been agreed upon. If either party then withdraws from the sale, they will lose their money.

Experts say this would reduce gazumping and the number of sales falling through.

Gazumping in Scotland

The law is different in Scotland when it comes to gazumping. To prevent buyers from being gazumped, an accepted offer is considered legally binding.

The only time gazumping is possible in Scotland is if a property survey reveals problems with the building that are expensive to put right. This then provides the buyer with a way to renegotiate, possibly reducing the asking price. This is when the seller may be tempted by a higher offer.

However, it's still rare for gazumping to occur.

How to Avoid Being Gazumped

Data from Market Financial Solutions revealed that 31% of British homeowners in the past decade have lost out on a property deal because of gazumping. Out of the people who lost out on a property, 39% still had to pay fees despite not completing the transaction.

The data above proves that gazumping is an issue you need to be aware of. There are several things buyers can do to avoid being gazumped. It’s never 100% preventable but there are a few tips and tricks to consider:

1. Be prepared and organised

Before making an offer, ensure that all your paperwork is gathered and that you’ve worked out your budget. It’s important to reduce the chance of any delays. Find a conveyancing solicitor, sort out a mortgage, have the necessary documents at hand and sort out your finances. The seller will be much more willing to continue if the process moves along quickly.

2. Get a mortgage in principle

A mortgage in principle is a conditional offer made by a mortgage lender stating that it will ‘in principle’ give you a loan up to a certain amount. Having this completed early will speed up the process and position you as an organised and appealing buyer.

3. Work quickly

Try to reduce the number of delays by moving the process along quickly. The quicker you hire a solicitor and surveyor the better. Compare My Move has the perfect tools to allow you to compare quotes and find a verified conveyancer, saving you both time and money.

4. Ask for the property to be taken off the market

If you ask the seller to take the property off the market, it will reduce the exposure the property has. This then limits the number of potential buyers who might make a counteroffer.

5. Build a relationship with the seller

The better the relationship you have with the seller, the more likely they are to favour you as a buyer. Keep them informed about what you’re doing and how close you are to being ready to exchange contracts.

6. Get insured

Home buyer protection insurance is a good way to protect yourself against gazumping. If the sale falls through because the seller accepts another offer, you can claim back some of the costs you’ve already spent. E.g. conveyancing and surveying fees. It provides extra peace of mind and protects you financially.

What to Do if You’re Gazumped

If you are gazumped, you could try to:

1. Make another, higher, offer to gazump the gazumper. However, you’ll need to be sure you can afford the extra cost.
2. Explain to the seller why you are the better buyer. For example, you might be chain-free, a cash buyer, a first-time buyer or flexible about the completion day. Do not be deceiving.

You can never be fully protected against gazumping, so it’s better to be prepared. However, if you’ve been gazumped after exchanging contracts, you should speak to your conveyancing solicitor. Even though it’s rare, it can still happen and you would then have a legal case against the seller due to the breach of contract.

What is Gazundering?

Gazumping is not to be confused with gazundering.

Gazundering is when the buyer and seller agree on a price but the buyer then lowers their offer before contracts are exchanged. The seller then has to decide whether to sell the property at a lower price or market it again in the hope of finding a buyer who will pay the original price.

Gazundering can occur any time before exchanging contracts as the transaction is not yet legally binding.

Next Steps of Buying a House

This article has been a part of our buying a home guide. The next step in the buying process will be completion day. To find out more read What Happens on Completion Day?