Third of purchases now secured by gazumping
Gazumping is on the rise. We look at the data, how to avoid it happening to you and make a fresh call for reforms to the system
July 6, 2021
2 minute read
The leading reason for property sales falling through is gazumping, according to new research from comparethemarket.com. Over the past year, nearly two-fifths (39%) of buyers admitted they had outbid an existing buyer who’s offer had been accepted to buy their home – also known as gazumping.
Those buyers paid more than £16,000 on average above the asking price of the property in order to secure the deal.
The research also suggests gazumping is becoming far more common in the housing market: three-quarters (75%) of prospective house-buyers would consider gazumping if their dream home was already under offer with another buyer.
What is gazumping?
Gazumping is when a house seller accepts another, higher offer prior to a sale despite having accepted an offer from someone else.
It’s a completely legal practice. After all, it isn’t until contracts are exchanged that the agreement to buy and sell a property becomes legally binding on both parties.
But it means ‘gazumped’ buyers often lose hundreds of pounds already paid out to surveyors, solicitors and mortgage brokers.
Fresh demands to stop gazumping
Given how disruptive gazumping can be to the home buying and selling process we have campaigned for changes to the system.
Speaking to the Daily Mail last week, Paula Higgins, CEO of the HomeOwners Alliance said, ‘When an offer is agreed, there is absolutely no legal obligation of any sort on either side. We have called for more certainty.
‘At the point of agreeing the price, but before either side spends any money, the home buyer and seller should commit to being “genuine” to proceed with the transaction – and to pay the other side £1,000 if they pull out.’
This standardised and legally binding reservation agreement isn’t a new idea. Our proposal takes the best of other systems, in particular Scotland and the Netherlands, to create a contract that protects buyers and sellers before they start spending money.
We think this will make the home buying and selling process more certain and less expensive overall.
In the meantime, how to avoid being gazumped
- Be prepared
Before you make an offer on any house, make sure you have a mortgage agreement in principle in place, a solicitor lined up and all of the necessary documentation to hand. These are the types of things that can cause unnecessary delays if you’re unprepared.
- Get insured
If another buyer comes in with a much higher offer than you, there’s very little you can do to stop the seller accepting it. But you can insure yourself against this happening by taking out home buyer protection insurance. If the sale falls through because the seller changes his mind or accepts another offer, you’ll be able to claim back some of your conveyancing fees, survey fees and any other costs you may have had to pay out.
Have you been gazumped? Tell us more about your situation in the comments below
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