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.
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