Buying a property – what is gazumping?
What is gazumping?
If you’re purchasing a property, gazumping can happen when the seller has agreed to an offer of sale from you, but then decides to accept a bid from another buyer. This is usually because they have been offered a higher price for the property.
Why could gazumping be a problem for you?
You may have already made an offer that the seller has accepted and then spent money on surveys, searches and other fees. Then you get gazumped – that is, the seller decides to sell the property to someone else. This would mean that you lose out on the money spent on getting ready to purchase the property.
Is gazumping against the law?
- In England and Wales:
Until contracts have been exchanged, the seller still has the legal right to change their mind and make an agreement with a different buyer.
- In Scotland:
To prevent gazumping in Scotland, an offer that is made and accepted on a property is legally binding.
Can you do anything to avoid being gazumped?
Purchasing a property can sometimes be a long process, and it doesn’t help to get close to the finish line, only to have your chosen home snatched out from under your nose by another buyer. There are, however, steps that you could take to try to prevent yourself from being gazumped. They include the following.
- Get a mortgage in principle before you begin your property search. This allows a lender to provide you with an estimate of what you may be able to borrow, showing that you’re ready to get the paperwork started once the seller has accepted your offer. If you’re just asking for a quote, this may show up as a ‘soft’ search on your credit report, which wouldn’t affect your credit score. If the lender makes a commitment to lend to you, however, it’s likely to appear as a ‘hard search’ on your credit report, which could impact your score.The mortgage in principle does not guarantee that you’ll receive the mortgage deal quoted once you’ve agreed to purchase a property. This is because the lender may reassess the deal based on the specific property being purchased.
- Obtain a lock in agreement (this can also be called a lock out, preliminary or exclusivity agreement). This ‘locks’ the seller in for an agreed period of time, when they agree not to entertain other offers. This should allow you time to sort out things like your mortgage without the possibility of another buyer competing with you for the property.
- Finding a conveyancing solicitor and a surveyor in advance may also help to speed up the sale.
- Keep the seller and estate agent updated on your progress towards the exchange of contracts, so that they know that you’re serious about purchasing the property.
- Ask if the property can be taken off the market, and is not available to view by other potential buyers.
- Deal with an estate agent that has a policy against gazumping. They may, for instance, ask the seller to sign an agreement promising to refuse any other offers once they’ve accepted one. It may be worth noting, though, that the seller may have more than one agent advertising the property.
- You may also want to consider signing up for an insurance policy that protects you from gazumping.
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