If you’re a homeowner and you’ve put your property on the market and you’ve accepted an offer, what happens if a different buyer comes along and makes you a more attractive offer? Welcome to the murky world of gazumping.
So what exactly is gazumping and how can you avoid it happening to you? Gazumping happens when a buyer makes an offer than has been accepted. Both parties will then naturally start planning for completion, then boom, another buyer makes a more attractive offer and the seller decides to sell to them instead.
Gazumping; Ethical No, Legal Yes
Although gazumping is a practice that can prove frustrating and problematic, it’s actually not illegal. That’s because, until the moment that you exchange contracts, a seller is not legally bound to complete an agreed transaction, even if they have formally accepted an offer.
Until contracts have been exchanged, both the buyer and seller in England and Wales are free to pull out of the transaction at any point.
What Can You Do About Gazumping?
As a seller, being ethical matters, but at the same time getting the best possible price for your property matters too! However, before accepting and proceeding with a higher offer, do ensure you consider it carefully.
The new buyers might be able to offer you more money for your property, but it could be that they are doing so as they are in a lengthy chain or are less able to move swiftly.
If you do decide to accept the higher offer then do the right thing and let all parties know as quickly as you can to minimise the negative impact it will have on the buyers you’re turning down.
If you’re in the position of having your offer now rejected having previously been agreed, you might want to reconsider your offer and could yourselves offer more, or you could decide to match the offer put forward by the new buyers.
Whatever you do, remain calm and don’t rush to offer more if your original accepted offer is as much as you can realistically afford.
It’s disappointing and frustrating when gazumping happens and it can actually prove to be quite distressing too. Following the acceptance of your offer, you’re likely to have already invested a considerable amount emotionally into the move and to have the property snatched away from you can be upsetting.
Unethical as it may be, remember though that the buyer is well within their legal rights to choose a higher offer, or even to choose an alternative buyer who’s offering the same as you who’s simply more attractive, for example, if they can move more quickly and are chain free.
There has been talk for some time about moving to a system closer to the one they have in Scotland and a “reservation agreement” has been put forward. This would mean that both parties would be legally bound to pay a penalty fee should they back out after the offer acceptance stage and It’s thought that such a penalty would reduce the frequency with which gazumping occurs.
In the meantime though which the practice still commonly occurs, If you’ve been gazumped, all you can really do is pick yourself up, dust yourself off and start the process again. Try to be philosophical about it and tell yourselves that the property you lost out on wasn’t meant to be and remain hopeful that the right property will come up again and this time you’ll complete without any problems.