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Gazumping is when a buyer who has had an offer accepted is then pushed out of the sale due to the seller accepting a different offer from someone else. Though considered unfair, it is legal to do in England and Wales but due to the difference in policies, it’s rarer in Scotland.
It can be very disappointing to lose out on a property you thought you had been accepted for. Gazumping can happen any time before you exchange contracts meaning that even after comparing conveyancers and starting the process, you could still be outbid. Compare My Move has created this guide to help you understand the meaning of gazumping and how to avoid it, making your conveyancing process that much easier.
Gazumping is when a buyer has an offer to purchase a property accepted by the seller but before the sale is completed, the seller accepts a different offer from another buyer. It’s not to be confused with gazundering which is when the buyer themselves lowers their offer on a previously agreed price. Gazumping can occur any time before exchanging contracts as the transaction is not yet legally binding.
Gazumping can occur when the seller wants to maximise the amount they’ll obtain and finds a higher offer. However, there are also other factors that can lead to gazumping. For example, if the buyer takes too long to conduct a property survey or to sell their previous home, then the seller may reject the offer due to the delay. If they find a buyer who they believe is in a better position to move more quickly, they may accept their offer instead.
It can be extremely 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 but it is not illegal.
Gazumping is actually legal throughout England and Wales. Despite making an offer and having it accepted, 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 even though the offer has been accepted, the sale is still 'subject to contract' and being agreed upon.
As the transaction is not yet complete and not yet legally binding, another buyer is not breaking the law by providing the seller with an alternative offer. The seller is also within their right to accept. It’s considered very unfair as the previous buyer would have already paid for the survey and other costs, but gazumping is not illegal.
Although gazumping is still legal in Scotland, it is a much rarer occurrence compared to England and Wales. To prevent buyers from being gazumped in Scotland, an offer that’s made and accepted on a property is considered as legally binding. Once you have made the offer, you’re expected to be fully committed and follow through with the purchase.
The only time gazumping is possible in Scotland is after a property survey is conducted, revealing the repairs needed and a general average of their cost. This then provides the buyer with a way to renegotiate, possibly reducing the asking price. This is when the seller may be easily tempted by a higher offer. However, it's still rare for gazumping to successfully occur.
There are a few things buyers can do to avoid being gazumped. From getting the property off the market to being fully organised in advance. Compare My Move has created a helpful list to aid you in the process of buying a house and prevent yourself from being gazumped. It’s never 100% preventable but there are a few tips and tricks to consider.
So, what can you do to avoid being gazumped?
If it still occurs after doing everything you can to try preventing it, take some time to think about your next steps and how you’ll deal with gazumping. First, review your finances and work out whether or not you can gazump your gazumper with another counteroffer. It doesn’t mean it can’t happen again, but if you’re financially able to then it could be worth a try.
Another option would be to try and sell yourself as an attractive buyer. If you’re a first-time buyer then use that to your advantage. Any buyer without a property chain (first-time buyer or otherwise) is instantly more appealing due to the process moving much more quickly. If you’re flexible with the moving date, highlight this. If you’re a cash buyer or have an approved mortgage, mention it. Mention anything that will make you seem more appealing to the seller, but remember to 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, then you should immediately speak to your conveyancing solicitor for advice. Even though it’s incredibly rare, it can still happen and you would then have a legal case against the seller due to the breach in contract.
We hope this guide has helped you understand the meaning of gazumping and how to avoid it happening to you. If you’ve had your offer accepted then it would be wise to find a professional conveyancer as soon as possible to reduce the risk of being gazumped. Simply fill out our quick and easy form to instantly get connected with up to 4 licensed conveyancing solicitors near you.