Gazumping occurs when you have had an offer accepted on a property, but before contracts are exchanged, the seller accepts a higher offer from someone else. Because the transaction is not legally binding until exchange of contracts in England and Wales, the seller is within their rights to do this, even though it can be frustrating and costly for the original buyer.
Gazumping can happen at any point before exchange. You may have already spent money on surveys, legal fees and mortgage applications, all of which could be lost if you are gazumped. The risk is higher in a fast-moving market where property prices are rising and demand is strong.
While there is no legal remedy for gazumping in England and Wales, there are steps you can take to reduce the risk. Moving quickly with your mortgage application and legal work, maintaining good communication with the estate agent, and asking the seller to take the property off the market once your offer is accepted can all help. In Scotland, the system works differently and the property becomes legally binding much earlier in the process.
You have an offer of £300,000 accepted on a house and have spent £1,500 on surveys and legal fees. Three weeks later, another buyer offers £315,000 and the seller accepts their offer instead, leaving you out of pocket.
Key Points
- Happens when a seller accepts a higher offer after already accepting yours
- Only possible before exchange of contracts
- Legal in England and Wales but not in Scotland
- You may lose money already spent on surveys, legal fees and applications
- Ask the seller to take the property off the market to reduce the risk