What is Gazumping & What to be aware of?

Gazumping is a term that is used to describe a situation, whereby a seller accepts a better offer from another buyer before the sale of a property, has gotten complete.

Gazumping is not uncommon, part of the property-buying process in England and Wales. This is because an agreement to buy or sell a property doesn’t become legally binding.

Until the lawyers exchange written contracts. Until that point, you only have a verbal agreement.

Gazumping can be a very traumatic experience for first-time buyers in Leicester. You may think you are about to purchase the property of your dreams when the sale comes hurtling down.

You may also be part of a chain that breaks and, as a result, you have to move your moving date back. It can be much more painful if you lose money as a result.

The reason for this is that you can sometimes be left out of pocket by non-refundable survey costs, conveyancing fees, and mortgage arrangement fees.

How does gazumping happen?

As we have mentioned, an agreement to buy or sell a property does not become legally binding until written contracts get exchanged.

Regrettably, there can be delays of up to several weeks between a seller accepting your offer and the exchange of deals taking place.

It can be due to having a property survey undertaken, your conveyancer carrying out the necessary searches and you have received your mortgage offer.

During this period, other First Time Buyers in Leicester may make a better offer on the property. Which the estate agent has to pass on to the seller.

Still, these preferable offers are not always better in terms of financial value. They may offer a faster sale or not have the burden of a chain.

Hence why the phrase ‘gazumping’ covers any preferable offer the seller decides to accept.

Ways to prevent gazumping

Sadly, certain things won’t happen until you have decided to make an offer, namely the property survey, conveyancer searches, and mortgage offer.

Nevertheless, you can decrease the time between making an offer and the contract exchange. Methods for doing this may include:

• Try to pinpoint a conveyancing solicitor and surveyor ahead.
  
• Act swiftly at each stage, providing all the relevant information the different parties require.
  
• Have a mortgage agreement in principle ready.

Also, there are a couple of tactics you could use that may help out. Add more security to the deal ahead of the exchange of contracts.

Firstly, as part of your offer, ask the seller to take the property off the market as this reduces the risk of other people seeing the property.

There is no obligation for them to agree, but it isn’t uncommon for them to respect this request, especially if they’ve struggled to receive offers in the first place.

Secondly, you could try to put in place a Lock-in Agreement that sees both parties put up a deposit as part of a binding agreement.

If either party attempts to change the deal or back out completely, then the other side takes their deposit.

These arrangements can incur costs such as legal fees to set it up, but you might feel it is worth the price for the security.

Finally, there are options to take out insurance to protect yourself against gazumping. These policies agree to pay you a set fee in the event of being gazumped.