After months and months of trawling the property websites, harassing and being harassed by estate agents, visiting properties that did not meet your requirements, visiting properties that did meet your requirements but did not meet your price range, you have finally found your perfect home for the perfect price…
But, days before the exchange of contracts, another buyer puts in a higher offer, and the seller backs out of their agreement with you to sell their property for a higher price. This is gazumping. You have been gazumped.
Gazumping usually occurs when there are too many buyers and not enough sellers and the competition for properties is fierce.
According to surveys, 1-2% of property transactions fail due to gazumping, which amounts to £350 million worth of consumer cash wasted. Potential buyers must be aware that being gazumped is a very real possibility, with 10% of buyers saying they would feel no guilt about gazumping a fellow buyer.
A recent survey by What House concluded that 73% of first time buyers believed that once an offer has been accepted it should be legally binding.
Gazumping is not completely unavoidable, and there is no legal protection against being gazumped, however, there are certain precautions that can be taken to reduce your chances of being gazumped.
1. When the offer is accepted make sure the estate agent is not showing any more potential buyers around the property.
2. Make sure the survey, the legal work to confirm the sale, and exchange of contracts date are agreed as soon as possible.
3. Some vendors take a pre-contract deposit of £1000 from both the buyer and the seller. If either party back out of the agreement, the other keeps both deposits. This provides security to both parties.