IMPORTANT ANNOUNCEMENT: MyWalletHero is becoming The Motley Fool UK - click here to read more about our name change.

How to deal with gazumping when buying a property

How to deal with gazumping when buying a property
Image source: Getty Images


Finding an affordable home can seem like a daunting and, at times, impossible task. Not only do buyers need to save a large deposit, but the purchase process can involve many challenges. One of these challenges is gazumping. Here’s what you need to know.

What is gazumping?

Gazumping is a situation where a buyer makes an offer to buy a property and the seller accepts it. Then, just before the sale completes, the seller accepts a higher bid from another buyer.

Understandably, this can be profoundly disappointing and upsetting for buyers. They can lose a significant amount of money, especially if they’ve paid for services like surveys, conveyancing and mortgage arrangement fees.

Is gazumping legal?

The sad reality is that however much gazumping appears unfair or unjust, it’s legal as long as contracts haven’t been exchanged.

However, it can take several weeks before contracts are exchanged, leaving it to the buyer to find ways to avoid falling victim to gazumping.

How can you protect yourself against gazumping?

GoodMove, a regulated property buying company, highlights three things buyers can do to protect themselves.

1. Ask the seller to take the property off the market

Sellers are under no obligation to take the property off the market, so as you make this request, know that you may need to prove that you’re a serious buyer. However, if a seller refuses to remove their property from the market, it’s a clear sign that they may yet be open to better offers.

2. Get a lock-in agreement

You could also get into a legally binding contract known as a lock-in agreement with your seller. Here, your seller agrees not to consider other buyers for a fixed period.

If you plan to get into such an agreement, it’s wise to seek the guidance of a conveyancing solicitor. The seller is under no obligation to accept or sign such an agreement.

If you’ve proven to the seller that you’re a serious buyer and they’re still unwilling to sign a lock-in agreement, there could be cause for concern.

3. Speed up the purchase process

If the purchase process takes too long, it creates room for another buyer to slide in and make a better offer. There are various things that you can do to quicken the purchase process:

  • Organise your finances – this involves making sure you can afford a mortgage and that no financial issues will delay the purchase process.
  • Find a conveyancing solicitor in advance – conveyancing solicitors ensure the buying process runs smoothly, all documents are correct and you’re protected from fraudulent deals. They also guide first-time buyers through their first purchase. Finding a conveyancing solicitor in advance could mean a fast and safe purchase process.
  • Find a surveyor in advance – it’s only wise to do your due diligence before committing to buying property. This means looking for a reputable property surveyor to inspect the property. Finding a surveyor in advance helps you avoid wasting time looking for one after you’ve made an offer.
  • Obtain a mortgage in principle – Getting a mortgage in principle shows sellers that you’re a serious buyer. It can make them feel more inclined to accept taking the property off the market or a lock-in agreement.

5 ‘must-see’ mortgage tips to help save money…

The mortgage application process can seem overwhelming, and down-right unaffordable at times. So where do you start if you’re looking to save money on your mortgage?

We’ve created this free report, “5 must-see tips to save money on a mortgage” to help you learn where the money-saving opportunities may be…

Just enter your email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to The Motley Fool sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Was this article helpful?
YesNo

Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.