When buying a home, having your offer accepted can feel like the final stage in your home buying journey - a reason to celebrate and start making long term plans. But, unfortunately, that's not always the case.
While gazumping may be less common now, it can still happen. Here we explain what it is and how you can avoid it.
What is Gazumping?
Gazumping is when a buyer has had an offer accepted by the seller, but before the deal is properly closed, an improved offer from another party is accepted instead.
Sadly, this is just a part of the home buying process, as frustrating as it is. Verbal agreements are not legally binding: only once your name is signed on the dotted line can it be upheld.
In a home sale, the contract stage is quite late in the process. It usually comes after the surveys and necessary legal checks have been done. This can be up to three months after the initial deal is done and until this stage is reached, there is the potential for buyers to be gazumped and essentially forfeit the money they have spent on the sale up to this point.
What is Gazundering?
Gazundering happens after an offer has been accepted by the seller and the legal processes of the purchase have begun. At the last minute, a buyer can withdraw their offer and make a lower one instead. The buyer attempts to take advantage of the fact that the seller will accept the lower offer to avoid the deal falling through, having to start again and cause a delay in their chain. Gazumping is common in a seller's market when property prices are consistently rising, however, gazundering tends to happen when prices are in decline. Despite neither being particularly common (both practices are seen as underhand) they are certainly worth being aware of.
Is Gazumping/Gazundering legal?
The disappointment of losing a property at the last moment can be deflating - particularly if it has a financial impact due to survey costs, legal and mortgage fees.
Despite this, gazumping is still perfectly legal in the UK and until written contracts are exchanged the sale is not complete - verbal agreements are not legally binding.
The most stressful part of the buying process comes between the offer being accepted, and the surveys and legal and mortgage documents being completed. This can last several weeks and it’s within this period buyers are most at risk of being gazumped.
How can I avoid getting gazumped?
Arrange a survey
As discussed, the window for opportunity for other parties to make offers is dependent on what happens during the final stages of a purchase. Keeping this period short is essential to minimising risk. Arranging a survey as soon as possible is key. It takes 5-6 days for a survey to be completed after the initial inspection.
Obtain a mortgage in principle
Finding your dream home isn’t always easy. But, obtaining a mortgage in principle with a lender will give you a better idea of how much you can budget for and during the later stages of a purchase, speed up the process. Doing this will help you to avoid unnecessary complications and extended the period between offering and closing.
Choose a conveyancer
It’s also advisable to seek quotes from conveyancers as early as possible. If you know who you want to work with at this vital point it can save valuable time.
Choose a surveyor
The same can be said of chartered surveyors. If you have somebody in place when you have had an offer accepted it can put you in a very strong position.
Ask to take the property off the market
There are no obligations for the seller to take their property off the market but it is not uncommon for them not to do so if asked.
Ask for a lock-in agreement
On occasions, buyers can suggest a lock-in agreement. This allows a short, fixed period to arrange the final stages of the deal and usually involves a small deposit.
If you've been gazumped and need help finding a new property, contact us today and our team of property experts can you to find the perfect home.