Gazumping is one of those terms that exists only within the property industry. It tends to come up during the purchase of a property, and is a term many buyers dread. Once you’ve had an offer accepted you may be tempted to crack open the bubbly and start celebrating.
Gazumping is one of those terms that exists only within the property industry. It tends to come up during the purchase of a property, and is a term many buyers dread. Once you’ve had an offer accepted you may be tempted to crack open the bubbly and start celebrating. Unfortunately there are still things that can go wrong and prevent your purchase from progressing to completion. Gazumping is one of them. If you’re buying or selling a house then gazumping is something that could happen to you.
We’ve written this jargon-busting guide to give you the lowdown on Gazumping. We’ll explain what gazumping means, how and when it can happen, why gazumping is bad for buyers, and whether gazumping is legal or illegal. We’ll also give you some handy tips on how you can avoid being gazumped, and what to do if you find yourself in a situation where you’ve been gazumped.
If you’re looking for some specific advice such as whether or not gazumping is illegal, or what to do if you’ve been gazumped, then use the menu below to navigate through the article more easily. Otherwise, read on for everything you need to know about gazumping.
Gazumping is a practice whereby a property seller accepts an offer on their house, and then rejects it later in favour of a better offer from another buyer. This is understandably very frustrating for the initial buyer. It pushes their property search back to square one and could create problems with their house sale if they are in a property chain. We’ve heard countless horror stories from prospective buyers who’ve lost out on their dream home because they’ve been gazumped.
So why does gazumping happen? Typically it comes down to price. The second buyer comes in with a higher offer and the vendor is tempted to get more money for their property. After all, the costs of selling a house in the UK can be substantial. Price isn’t always the reason though. A seller may also wish to accept an offer if the buyer is in a more proceedable position and able to complete the purchase more quickly. Selling a house can take a long time, and if the vendor wants to sell their house fast then a buyer who can move more quickly, potentially as a cash buyer, then it can be an attractive option.
Gazumping can happen at any time during the sale process before contracts have been exchanged. This is when the sale of the property becomes legally binding. So gazumping can happen at any stage of the conveyancing process whilst the property is under offer.
This is why gazumping is so bad for buyers. They can spend money on surveys and searches, pay their conveyancing solicitor, and spend time getting a mortgage arranged and agreed, only to have the purchase pulled at the last minute. This can mean that they’re left at a loose end, with a fair amount of wasted money.
Gazumping is not illegal in the UK. Any property sale is not legally binding until the exchange of contracts. This means that technically the house seller can choose to accept another offer for any reason they choose. Though typically it’s based on price or speed.
Whilst this can be a threat for buyers to move more quickly, it works both ways. The opposite of gazumping is gazundering. This happens where the buyer offers a lower amount later in the house sale process. If a seller is proving to be slow or uncooperative, it’s not uncommon for buyers to threaten to reduce their offer. If the seller’s property had little interest to begin with, this can help them to take the process more seriously, pull their finger out, and progress towards a faster house sale.
Market Financial Solutions (MFS) conducted a report called ‘Gazumped Britain’ in which they showed the results of a survey carried out on 750 adults in the UK property market. Their findings highlighted that gazumping is common, costly, and widely accepted amongst Britons.
Specifically, they found that around a third (31%) of UK homeowners had previously lost out on a property purchase as a result of being gazumped. Two fifths (39%) have had to pay fees on a property purchase that did not end up completing, and 43% of homeowners would gazump another buyer if it meant that they could successfully complete on a property purchase.
Despite the willingness to gazump others, the consensus is that there’s need for more regulation to prevent gazumping. Two thirds of UK homeowners think that buying a property has become more difficult as a result of increased competition. 80% of homeowners are in favour of regulations to ban Gazumping in the UK.
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