When your offer is accepted on a property, it feels like nothing can stand in your way. Especially if you have had a long search, this point can feel like the home stretch. However, this is where the hard work begins. The legal process is started when an offer is accepted, and the conveyancing work gets underway. This is also where the risk of gazumping is introduced into the transaction.
What does gazumping mean?
Gazumping is where the seller rejects an offer that they previously accepted in favour of a higher one. Usually, at the last minute, they accept a better offer from another buyer. The experience can be devastating for the original buyer, particularly if their heart was set on the property. Although considered to be an unfair practice, the gazumping process is completely legal.
What reasons are there for being gazumped?
There are many reasons for gazumping to take place, depending on the needs of the seller. Most commonly, they are enticed by the prospect of more money. Another is that the new buyer may be in a better position and can complete quicker. It could even be due to unnecessary delays at the beginning of the transaction, which knocks the seller’s confidence.
What can you do to protect yourself from gazumping?
There are steps buyers can take to reduce the risk of gazumping happening to them. Although nothing is guaranteed, these tips can help keep the transaction on the right track.
- Remove the property from the market: This will prevent new buyers from viewing the property and making higher offers.
- Prepare yourself before making an offer: Meaning to have your conveyancer ready to instruct and a mortgage in principle agreement in place.
- Consider putting an agreement in place: Exclusivity agreements can prevent sellers from seeking and accepting new offers on the property.
- Hold up your end of the transaction: Complete your paperwork as quickly and accurately as possible, while maintaining close communication with your conveyancer and mortgage broker.
- Bond with the seller: A good relationship and regular communication with your seller can help reassure them during the transaction.
Follow these tips to reduce the risk of being gazumped!
Like many aspects of the property market, there are no guarantees that gazumping will not happen to you. However, these tips are great in helping to minimise the risk and give you as a buyer peace of mind. Although the decision is ultimately the seller’s, establishing a strong foundation in the transaction will benefit both of you in the long run.
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