Here, Caroline Murray, partner and head of property at Graysons, looks at gazumping, why it happens and what, if anything, can be done about it.

What is gazumping?

Gazumping is when you have made an offer on a property and the seller has accepted it, then someone else makes a higher offer and the seller accepts that.  Your offer is no longer valid, and you will need to go back to the beginning, whether that is to look for a new property or make a higher counter-offer.

When can gazumping happen?

You can be gazumped any time before you have exchanged contracts. However, if the seller accepts a higher offer or pulls out of the sale once the contracts have been exchanged, you can sue them for any losses this causes.

Is gazumping legal?

Unfortunately, no matter how much inconvenience it causes, gazumping is legal in England and Wales as the seller’s agreement to sell the property to you does not become legally binding until you have exchanged contracts.  As this is one of the last things to happen in the purchase process, after you have had surveys and searches done and received a mortgage offer, gazumping is something that many people fear.

You will often see ‘sold subject to contract’ or ‘sold STC” posted on a for sale poster outside a house.  This indicates that an offer has been made but the sale is not final until contracts are exchanged.

Why does gazumping happen?

Usually, gazumping happens because the seller wants to get as much money as possible for their property.  If you make a low offer and the seller accepts it, you will be vulnerable to gazumping.  However, a seller can decide to accept another offer for any reason.  It might be because they think you are taking too long with the purchase, or they lose confidence in your ability or will to buy the property.  It may simply be because they are looking for a quick sale and receive an offer from someone who can move more quickly than you.

How prevalent is gazumping?

The UK property market is extremely competitive at the moment and, along with a shortage of properties, this makes the prospect of gazumping high. It is thought that there are around 29 people wanting to buy every property for sale in the UK at the moment.

A survey by Market Financial Solutions (MFS) in April 2022 showed that out of 524 people who had bought a property in England or Wales, 31% said they have been gazumped at least once since 2012. This rose to 51% in London.  26% admitted to having gazumped another buyer, and 47% said they would consider gazumping if it led to them getting the property they wanted.

What costs are likely to be incurred if I am gazumped?

The seller is unlikely to incur any costs, but you will most likely have already paid for searches, surveys and mortgage lending fees and will have incurred costs from your solicitor when you are gazumped.

Is gazumping avoidable?

There is nothing you can do to avoid being gazumped.  However, you can protect yourself against any financial loss you incur after having your offer accepted.  Home buyer protection insurance will cover some of these costs if your seller changes their mind and pulls out of the sale after they have accepted your offer. This insurance is relatively cheap at around £60 (July 2022).

The seller will always know that a higher offer has been made as estate agents are legally obliged to pass on all offers to them, even if they have already accepted an offer.  If you are unsure whether a higher offer has actually been made, or whether the seller is just trying to get a higher price for their property, you can ask the estate agent for proof of the offer in writing.  However, beware, the seller could pull out for another reason if they want to.

What can you do to try to avoid being gazumped?

You will want to get to the point of exchanging contracts as soon as possible, so be prepared to move towards that as quickly as you can.  Get an experienced property solicitor lined up and ask them what information you are likely to need so that you can get it ready in advance.  Make sure you have a mortgage in principle agreement in place (if you are not a cash buyer).

If you are selling your property as well as buying a new one, make sure it is on the market.  You shouldn’t make an offer on a property unless you already have one on yours.  If you do, you are leaving yourself open to gazumping if your own sale takes too long.

Ask the seller to take the property off the market.  They are not obliged to, but some will.  If the property is not being actively advertised, there is less chance of anyone else seeing it and of you being gazumped.

Keep your sellers updated with your progress so that they know you are serious and that things are moving along.

Speak to your solicitor about whether you should consider a ‘lock-out agreement’.  This is an agreement between you and the seller that states that you have the exclusive right to buy the property within a certain period of time.  Of course, not all sellers will sign such an agreement, but it is worth asking them.

What should you do if you are gazumped?

If you have made an offer on a property and you are gazumped, consider whether you want to continue with the purchase.  If you don’t, you will, unfortunately, have to start your house search again.  If you really want the property, you need to try to persuade the seller that you are the right person to buy it and highlight why.  For example: whether you are part of a chain or not, what stage of the conveyancing process you are at, your cash or mortgage position, or that you can be completely flexible with the seller regarding the move date – are all issues that you can discuss – or you can just try to stress how much you want the property and how much you love it!

Failing that, you can make a higher offer, but do check your finances first to make sure that you aren’t overstretching yourself, and that you aren’t offering over the actual value of the property – unless you want to, of course.  Remember – you could be gazumped again!

Is gazumping the same as gazundering?

No, gazundering is where a buyer lowers their offer at the last minute – before contracts are exchanged – and the seller is left in a position where they have to decide to accept or start again.  Often the seller feels obliged to accept as they are so far down the path and are part of a chain that would break if they do not.

Again, gazundering is legal in England and Wales and can be as unfair and upsetting as gazumping.

If you need advice or guidance on any issue relating to buying or selling property, contact our property experts now.  You can also get a no-obligation quotation for your sale or purchase by using our online conveyancing quotation system.