When you’ve made the offer on your perfect home and get the exciting news that it has been accepted you might think that’s all the stress and challenges over. That might very well be the case but sometimes gazumping can occur which will be a major setback and a big disappointment. In this guide we will be explaining exactly what gazumping is and how you can potentially avoid it. It could be that there isn’t anything you can do to avoid it necessarily but at least you will be prepared for it if you think there is a possibility of gazumping.
What does gazumping mean?
Gazumping is when a seller accepts an offer on their property only to then pull out of the sale in favour of another offer from a different buyer later on. This often happens because the second offer is higher, and the seller wants to make as much money on the sale as possible. However, it can also occur if the original buyer is taking too long with a certain part of the process. As a result, the seller may accept another offer from a buyer who is in a stronger position to complete the sale quickly.
There’s no denying that gazumping is incredibly harsh on the original buyer who not only will have been happy that they’re getting the house they want and can start planning for their future with it, but also might have already spent time and money arranging surveys on the property.
Unfortunately, though gazumping is very legal and can happen at any time before contracts have been exchanged. It is at this point in the process that the sale is legally binding. So, if a seller tries to accept a higher offer after exchanging contracts or back out of the sale for any reason, the buyer is within their rights to sue them for losses and could even keep their deposit.
How to avoid being gazumped
If you make an offer on a house before you are fully ready to then you’ll end up scrambling trying to organise everything after the offer has gone through, keeping the seller waiting. They might become impatient and frustrated that you aren’t prepared to move forward with the sale efficiently and accept an offer from a well-prepared buyer.
To avoid this, you should make sure you have your mortgage in principle ready from your lender and a solicitor ready with all the documentation required to complete the residential conveyancing. Any unnecessary delays can be avoided, and you will be showing the seller that you are serious and committed.
Ask the seller to remove the house from the market
Sellers aren’t always willing to do this, but it is worth asking anyway, especially if you have already shown that you have a mortgage in principle ready and any other important documentation. The agreement to take the property off the market can be made legally binding with confirmation in writing or an exclusivity agreement.
Without this, the seller could easily put the property back on the market at any time. If the house is not on the market, there is much less chance of your offer being gazumped so if the seller is open to doing this it will give you a lot of peace of mind.
Keep things moving quickly
Once your offer has been accepted and the process starts moving, you’ll want to ensure that everything stays on track, and you get to the exchange of contracts as quickly as possible. Stay in regular contact with everyone involved in the sale including your conveyancing solicitor, mortgage broker, and surveyor.
When you need to read and sign forms, make sure you do so as soon as you can. If things start to go quiet make a phone call or send an email to check for updates, that will ensure your case doesn’t get forgotten about. The sooner you can exchange contracts and make the sale legally binding the less risk there is of being gazumped.
Build a relationship with the seller
If you can get to know the seller during the process and have the opportunity to show that you’re a serious buyer, there is less chance that they’ll abandon you for another offer. Keep them up to date on how things are moving and go the extra mile to be the perfect buyer.
It might seem like just another cost but will be extremely beneficial to have Home Buyers Protection insurance if you end up being gazumped. This insurance is specifically designed to protect buyers who might otherwise lose out on hundreds or even thousands of pounds in surveys, legal fees, and mortgage arrangement fees if the sale falls through. So, if the seller accepts another offer, even though there’s nothing you can do to change that, you can at least know that you won’t be out of pocket and can start looking for another property straight away.
Gazumping is not massively likely to happen during your property buying journey, but either way it’s good to have an awareness of it so you can effectively prepare just in case it does. If you’re buying a house and need expert residential conveyancing in Cramlington the team at Toomey Legal are here to help. Contact us today to discuss your needs with one of our experienced and professional solicitors. Our conveyancing services can help ensure your house purchase goes through quickly and efficiently.