what it is, is it legal, and how to stop it happening to you

As house prices increase and demand outweighs supply, the threat of gazumping can become all the more real. Buying a house is rarely described as plain-sailing all the way. There’s the job of finding the right property, negotiating a price, holding your nerve during a survey, perfecting a mortgage application – the list goes on.

But gazumping is an unexpected curveball that can leave buyers feeling thrown, despite the fact it’s fairly common.

What is gazumping?

You think you’re on your way to buying a home, then, bam! Out of nowhere, a new buyer swoops in with a bigger offer – and the seller accepts it, putting you back to square one. Gazumping is the dynamic term for this misery.

It’s not only frustrating, but can be costly too. Often, gazumped buyers have already paid for a survey or legal fees, on a property they can no longer buy.

Christopher Bramwell, head of west London residential at estate agency Savills, says: ‘Gazumping is more common in a seller’s market – in other words, when property prices are rising.’

Nathan Emerson, chief executive of Propertymark, the professional body for estate agents, agrees. He says: ‘Gazumping never really goes away but will become more prevalent in hot markets where competition is fierce.

‘Legally all offers an agent receives have to be put forward, and gazumping will depend on what the seller instructs the agent to do.’

Is gazumping legal?

Yes, sadly. It’s a frowned-upon practice, but it’s not against the law. There will be occasions when it’s reasonable for sellers to take this action. For example, if buyers appear flaky and likely to pull out.

When an offer on a property is accepted, the sale is not yet legally binding. This applies to homes in England, Wales, and Northern Ireland. House-buying rules in Scotland are slightly different. Gazumping can still technically happen in Scotland, but it’s much less likely to.

Bramwell, of Savills, says: ‘Unfortunately, in property sales, the written contract usually doesn’t appear until building surveys and relevant legal checks have been carried out, which can take as long as three months after a verbal acceptance.

‘Until this stage is reached, buyers are prone to being gazumped and losing any money they’ve spent on fees so far.’

What should I do if I’ve been gazumped?

Your next move is based on budget and gut instinct. Do you have more money, or the ability to borrow more, to increase your offer? And are you prepared to pay more?

If you’re ready to fight for the home you want, and have financial means to back you up, then you could meet or outbid your rival’s offer.

Use our mortgage calculator to see how much you might be able to borrow.

However, you might decide that you don’t trust the sellers, and would rather walk away before it gets any uglier. Either way you lose money already spent and the house that was promised, or you pay more to salvage the deal.

Unless you’re the reason for the gazumping. If a seller’s patience is wearing thin because of delays at your end, agree to speed things up. Appeal to their sense of reason, and reassure them that you will be closing the deal as swiftly as possible.

How can I avoid being gazumped?

Early verbal agreements about how you want the purchase to progress can help. Emerson adds: ‘To reduce the possibility of being gazumped, buyers can request sellers stop marketing the property once a sale is agreed.

‘This may prevent exposure to additional buyers on property portals, and reduce the risk of additional offers being submitted.’

There’s also value in showing commitment – by being organised and moving through each stage without delay.

Have a mortgage in principle ready when you are house-hunting, showing you have calculated what you can afford, and are likely to be accepted for a mortgage.

Image credit: Future PLC/ David Giles

More money from a higher offer might sound good, but sellers take a risk if they abandon existing buyers to start over again with new ones.

Bramwell says: ‘You can reduce the risk of gazumping by building a good relationship with sellers. And, of course, working to get to the exchange of contracts as soon as possible.’

Once contracts are exchanged, there are strong financial penalties if either party pulls out of the deal. Stay in contact with estate agents and solicitors on both sides, regularly keeping everyone up to date about progress.

Bramwell adds: ‘It may also be worth checking whether your seller’s agent has a policy on gazumping. Meaning they require the seller to turn down any offers made after the initial acceptance.’

Another option is home buyers’ insurance. It reimburses your financial losses if a home purchase falls through – covering costs like survey, legal and mortgage fees.

Policies will vary in how much can be paid out and under what circumstances.

Prices range from £60 to £130 and can be bought through HomeOwners Alliance, the property advice company, and specialist insurers like Surewise.

Home buyers’ insurance won’t protect you from disappointment if you miss out on your dream home, but can limit financial pain.