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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

2 minute read

Third of purchases now secured by gazumping

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.

For more tips on avoiding being gazumped, see our full guide

Have you been gazumped? Tell us more about your situation in the comments below


Leave a comment (5)* Required

  1. Peter RoydsPeter Royds

    I have been let down by buyers who pulled out late in the day for financial reasons, which led to a collapse of the chain as my vendors chose to sell elsewhere out of impatience to move on. I understand the reasons at both ends, but I am nonetheless seriously out of pocket for bills for solicitors and surveys for both selling my house and preparing to purchase the next, and none of this was my choice nor my fault. Gazumping is the other side of the same painful coin.

    I would welcome an American style system whereby if people pull out of a sale on either side, they are liable for the costs incurred by those they are affecting. If people were liable for these costs, gazumping, impatience or poor decision making might happen considerably less.

  2. Doneraile William MulveyDoneraile William Mulvey

    I read with interest, I thought this ‘wicked’ practice had died out. I am new to buying and selling at the age of 59, so far the process is going well, I have to say, I put a higher offer on the table, well above the asking price, to seal the deal, so I guess I gazumped somebody. I am moving out of London, so I am in a stronger position etc.

  3. June ScottJune Scott

    I have been gazumed times. I offered well over the asking price, and then I was gazumped. I lost my buyer, who was in a chain and this had a knock on effect with their buyer(s). i did have a solicitor lined up however, but I held back giving instructions, as I was aware of the gazumping. I have now taken my home off the market, s it became too stressfull. I not a novice at buying an selling houses (I have bought an sold properties 5 times, but I have never experienced this kind of marketing. It is now termed as a bidding war!

  4. RMRM

    I don’t believe that statistic for a moment and I’ve been selling houses for 20+ years. I suspect most of joe public don’t quite understand what gazumping is and in fact were just outbid by another buyer.

  5. KeithHKeithH

    We were effectively a cash buyer ourselves as we had a cash buyer for our home and no mortgages were involved. We found a new build property in Essex in a small development of 6 new homes and agreed a price with the estate agent (who was also the son of the developer) and proceeded with our purchase.

    After several weeks, and numerous visits to site I was called by the estate agent to say he had received a higher bid. He wouldn’t say what that bid was, or how they knew what to bid to gazump us. We didn’t know if this new ‘bidder’ was real or not.

    The agent said he would accept “best and final offers” up to midday the following day. We told him we had put our bid in and that having shaken hands we would stand by it. The next day we got the dreaded call to say we had been outbid (gazumped) “but if anything falls through I will be straight back to you” said the agent.

    We looked, and found, a better home elsewhere but, and maybe this was Karma, the house we were going to buy came back on the market a few weeks later! Boy did we smile then.

    Despite all the hype of the stamp duty holiday, 3 of the 6 homes in this new development still were for sale. I hope the developer, and the estate agent son, have learned their lesson of not looking a gift horse……………..

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