Finding a desired home can be a mix of both heartening and daunting experiences. A dream come true – when perfectly put. And why not? You’ve scoured listings, visited properties and finally, you’ve found the one where you picture yourself with your loved ones.
All this sounds so perfect and flawless but if you’re amid buying a home in the UK, you’ve probably encountered the term gazumping. It’s an unfortunate reality of the property market and can be a deeply frustrating experience, leaving buyers left out in the cold, which made them feel both blindsided and financially strained. According to well-researched data, 37% of homebuyers are now being gazumped and this figure has grown by 6% in the last two years.
Buying a house is likely the largest financial commitment you’ll make in your life. It’s a stressful process, made even more complicated by the potential for setbacks like gazumping. In this article, we’ll explore what gazumping is, its legality in the UK, and the steps you can take to avoid falling victim to it. If you’re facing this dilemma, we’ve got you covered.
What is gazumping?
Let’s start with the basics: gazumping occurs when a seller accepts a higher offer from a new buyer after having already agreed on a sale price with another buyer. Imagine the scenario: you’ve made an offer on a house, the seller accepts, and you think you’re in the clear. You start arranging your mortgage, pay for a survey, and instruct a solicitor. But then, just before contracts are exchanged, the seller informs you that they’ve accepted a better offer. You’re left either raising your bid or walking away—often out-of-pocket for expenses like survey fees.
In the UK, property sales aren’t legally binding until contracts are exchanged, which is why gazumping can happen. It’s the ultimate curveball, especially after you’ve spent time and money preparing for the sale.
What is gazumping UK – some facts to know?
Gazumping UK isn’t just a rare occurrence—it’s something every UK homebuyer should be aware of. The UK housing market is notoriously competitive, and since verbal agreements aren’t legally binding, sellers are free to accept a higher offer even after initially agreeing to sell to you.
Unlike in Scotland, where the process is more locked-in early on, the English and Welsh property markets operate in such a way that until contracts are exchanged, nothing is final. This gives room for a higher bidder to swoop in at the last minute, leaving the original buyer high and dry and in the cold. With this said, here are some key factors to know about Gazumping UK:
- Gazumping is not illegal in the UK.
- Property transactions in the UK are not legally binding until contracts are exchanged.
- Gazumping is more common in competitive housing markets where demand exceeds supply.
- Gazumping can be financially stressful and frustrating for buyers.
- The UK housing market’s reliance on a formal offer process, rather than a reservation fee or deposit system, contributes to the prevalence of gazumping.
Is gazumping illegal?
Many first-time buyers often ask: Is gazumping illegal? Unfortunately, it’s not. Although it feels unjust and unethical, it remains perfectly legal in the UK. Sellers have no obligation to proceed with the initial offer until contracts are signed.
Legally, the seller had every right to do this because the deal isn’t final until contracts are signed. This legal setup puts buyers in a tough spot. It’s easy to feel frustrated and upset, but right now, the law doesn’t protect buyers from gazumping.
Should you accept a gazumping offer?
For sellers, being in the position of receiving a higher offer—especially during a hot market—can feel like winning the lottery. However, just because you can accept a gazumping offer doesn’t mean you should. Before jumping at the chance for extra cash, consider:
- The new buyer may not be as ready as the initial buyer. By accepting the new offer, you could face weeks of delays.
- You might gain financially in the short term, but the negative impact of gazumping on your reputation with agents and other potential buyers may haunt you later. It’s considered an ethically questionable move in the industry.
- Especially in an unstable market, there’s a risk the new buyer might pull out too, leaving you back at square one.
Pros of accepting a gazumping offer
- There’s no denying that a higher offer means more profit.
Cons of accepting a gazumping offer
- Possible delays and complications.
- A hit to your credibility as a trustworthy seller.
- Risk of jeopardizing the entire sale if the second buyer falls through.
How to avoid being gazumped
Buyers, you’re not completely powerless. While gazumping might be legal, there are several strategies you can employ to reduce the likelihood of it happening to you:
- Time is your best ally. By acting swiftly, especially when it comes to getting your finances and legal team in order, you can minimize the window of opportunity for other buyers to swoop in.
- Though not commonly used, lock-in agreements or exclusivity clauses can be negotiated. This legally binds the seller to you for a set period, preventing them from accepting a higher offer.
- Keep regular communication with the seller and estate agent. Let them know you’re serious about the purchase and moving as fast as possible.
The role of estate agents in gazumping
Estate agents play a crucial role in the home-buying process, and their actions can influence the likelihood of gazumping. While their main duty is to facilitate the sale, various factors tied to their involvement can either increase or decrease the chances of gazumping.
- Estate agents are required by law to inform sellers of any new or higher offers, even after an initial offer is accepted. This often leads to gazumping scenarios.
- Some estate agents may push sellers to hold out for higher bids, especially in competitive markets, creating more opportunities for buyers being gazumped.
- Poor communication between the buyer, seller, and estate agent can increase the likelihood of gazumping. Estate agents who don’t push for fast-moving legal procedures may leave more time for other offers to emerge.
- A proactive estate agent can speed up the sale by helping finalize contracts quickly, reducing the window for gazumping to occur.
- Buyers should communicate frequently with their estate agent, emphasizing their seriousness about the purchase, which might discourage the agent from entertaining additional offers.
How Zapperty can help
Gazumping is a tough reality in the UK property market but understanding it and knowing how to protect yourself can make all the difference.
To avoid the stress and uncertainty of competing offers, turn to Zapperty. Our straightforward, hassle-free process locks in your sale and eliminates the risk of last-minute bids from other buyers. Visit our Sell House page to see how Zapperty can simplify your selling experience and provide peace of mind.
FAQ’s
What to do if you’re gazumped
Sadly, if you’ve been gazumped, your options are limited. You can either try to match or beat the higher offer, or you may choose to walk away. However, be aware that pursuing a bidding war can lead to financial strain, making you question whether the property is worth the extra cost. Sometimes, walking away and cutting your losses can be the wisest decision.
Should I accept a gazumping offer?
Deciding whether to accept a gazumping offer involves your budget and priorities. If the new offer is within your financial comfort zone and you really want the property, it might be worth considering. Moreover, you could also negotiate with the seller if you’re open to increasing your offer. A pro tip here is to always consult your real estate agent to ensure your choice fits with market conditions and your personal needs.
What is gazundering?
Gazundering is when a buyer drops their offer at the last minute, just before contracts are signed. It’s the opposite of gazumping and, while less common, can be just as frustrating for sellers. It can disrupt the sales and cause complications in the process.
Can estate agents in the UK reveal other offers on a property?
In the UK, estate agents must let you know if there are other offers on the table but aren’t obligated to disclose the exact amounts. If the seller agrees, though, your agent can share those details with you. If you’re unsure about your offer, you can ask your agent to check if the seller is open to revealing the other offer amounts.
Is gazumping unethical? How so?
Gazumping, where a seller accepts a higher offer after initially agreeing to sell to you, is generally considered unethical. It can be frustrating and disruptive, as it often leaves buyers scrambling and can lead to wasted time and money. This practice undermines trust in the buying process and can cause significant stress for those affected. While it’s legal, the lack of commitment and respect for initial agreements makes it widely regarded as unfair.