Homebuyers: How to Reduce your Chances of Being Gazumped

Being gazumped in the final stages of buying a house or flat can be heartbreaking. How can you reduce the chances of it happening to you?

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What is gazumping?

You’ve found the perfect home and your offer has been accepted. The conveyancing process is nearing completion and then, at the last minute, the seller accepts a higher offer from another buyer. You’ve just been gazumped.

If your move was need-driven by a new job or school, for example, the setback can be particularly devastating.

In addition to the emotional distress, gazumping can also leave buyers thousands of pounds out of pocket. Depending on how far your purchase has progressed, you may have paid non-refundable mortgage application fees, search fees, conveyancing fees and survey costs

Is gazumping legal?

Buyers are often surprised to learn that gazumping is legal. In England and Wales, until contracts have been exchanged, the seller is free to accept a better offer.

There have been numerous attempts to change the home buying process over recent years. For example, 'reservation agreements' were proposed as a way to lock buyers and sellers in at an earlier stage in the process.

Despite these attempts, the buying and selling process remains unchanged and gazumping is still a reality.

What steps can I take to reduce the chances of being gazumped?

Although you cannot predict the future behaviour of the seller, there are a number of steps you can take that can significantly reduce the probability of being gazumped:

1. Start the legal process as early as possible

The longer the conveyancing process takes, the greater the likelihood of something going wrong. Gazumping doesn't always happen as a result of a higher offer from another buyer. If the legal process is taking to long, the seller may jump ship and accept an offer from a buyer who is able to complete quickly.

Ideally buyers and sellers, up and down the housing chain, will have started the legal process before a sale is agreed.

With solicitors primed and ready to go when an offer is accepted, weeks can be shaved off the conveyancing process.

Read more:

When is the best time to instruct a conveyancing solicitor?

2. Ask your lender for a Decision in Principle (DIP)

A Decision in Principle (DIP), sometimes referred to as an Agreement in Principle (AIP), is when a mortgage lender confirms that they will lend to you.

The lender will still need to carry out their due diligence on the property, but a DIP can speed up the mortgage approval process once you find a property to buy.

Having A DIP in place will demonstrate to the seller and the agent that you are a serious and proactive buyer. As such, your offer will be more appealing.

2. Insist that the property is taken off the market

Unless the seller has a good reason to object, your offer should be conditional on the property being taken off the market.

The seller will likely refuse if your property is not yet on the market. They might even resist if you haven't found a buyer for your property.

Do all you can to put yourself in a 'ready to proceed' position as quickly as possible. Once your property is on the market or you accept an offer, you should then insist that the seller takes their property off the market.

Ask the seller's estate agent to:

  • confirm, in writing, that the property has been taken off the market and that all marketing activity will cease
  • put a 'Sold STC' sticker on the for sale sign
  • update the particulars in the agent's window to 'Sold STC"
  • update the details on the property portals (Rightmove, Zoopla etc.) to 'Sold STC'

3. Develop a good relationship with the vendor

Do all you can to present yourself to the seller (and their agent) as approachable, reliable and trustworthy,

Try to find a personal connection. When viewing the property, build a rapport by flattering the seller and their home. If the seller can see that you love their home as much as they do, they will be less likely to accept an offer from someone else.

If you decide to make an offer, make sure the seller remembers who you are by referencing something you discussed during the viewing.

If your offer is accepted, go out of your way to make sure the seller finds dealing with you a positive experience. It will be harder for a seller to accept a higher offer from another buyer if they have a rapport with you. This may sound calculating but you should do whatever you can to give your purchase the best chance of success.

4. Stay in regular contact with your agent and solicitor

Until you exchange contracts there is a risk of being gazumped. Your solicitor will be coordinating the legal process but don’t be a passenger.

Keep the pressure on your solicitor, lender and surveyor to keep the process moving forwards. Complete any forms and answer any questions as quickly as possible. If you are also selling a property, do all you can t be proactive and keep your sale moving as well.

Read more:

How to speed up the conveyancing process

5. Confirm the other buyer's offer is real

Although rare, certain unscrupulous agents have in the past fabricated offers to pressure you into increasing your offer. If the seller's s agent tells you they have received a higher offer, ask for proof in writing. It might just be a ploy to get you to increase your offer.

6. Consider homebuyer protection insurance

Despite your best efforts, you might still get gazumped. You can cover yourself against the losing money in an aborted purchase (surveys fees, searches, mortgage fees, legal costs etc.) with homebuyer protection insurance.

Policies can be purchased from around £50.

See also

Gazundering can be avoided when selling your home

How we can help you

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Gaynor Haliday, Legal researcher

Gaynor Haliday, Legal researcher