If you’ve owned property before, you will probably have heard of the term ‘gazumping’.
It’s an odd word, granted, but for buyers it’s a word that can translate as both ‘heartbreak’ and ‘costly’.
Because gazumping is the morally questionable tactic where another buyer steps in at the last minute and snatches your dream home away from you with a higher offer.
Of course, sellers don’t have to accept the gazumping offer, but many do and this can cause buyers huge distress, not to mention damage to their wallet.
While there’s not much you can do if you do find yourself gazumped, besides making another offer to gazump the gazumping offer, there are things you can do to put yourself in a solid position and avoid the pain of seeing your dream home taken by someone else…
How to avoid being gazumped
In England and Wales, gazumping is perfectly legal.
Indeed, until the ink is dry and contracts have been exchanged, no sale is legally binding.
And that means, in a seller’s market where there is stiff competition for property, almost any buyer is at risk of being gazumped.
But how do you avoid it happening to you? Here are five things you can do, which should help…
1. Get your purchase completed quickly
Okay, we realise this isn’t always as easy as it sounds.
After all, you’re at the mercy of your seller, the local authority searches and the speed of your solicitor.
But you can ensure you keep your side of the process up together in order to keep things moving at pace.
Make sure your finances are in place and you have a mortgage agreement in principle before you make an offer.
You should also have a solicitor on standby and even a surveyor, so they can act quickly once your offer has been accepted.
Ensure all documentation is ready and to hand, so you can submit everything when it’s needed.
The quicker your purchase goes through, the less chance you’ll have of someone emerging from the shadows with a higher offer than yours.
2. Ask that the property is taken off the market
When making your offer, make it clear that you wish for the property to be taken off the market.
The seller doesn’t have to agree to this, of course, and whether they do may depend on the strength of your offer.
If you come in well below the asking price, the seller may wish to keep the property on the market in case a higher offer comes in.
If your seller does agree to remove the property from the open market, get it in writing, too.
3. Build rapport with the seller
We’re not suggesting for a minute that you should take your seller out for a slap-up meal in a bid to woo them away from accepting any higher offer that may come in.
After all, the reason solicitors and estate agents are used in property sales is as a go-between between buyer and seller.
But if you can show the seller how serious you are about their home and how much you love it, they will be less likely to welcome a gazumper with open arms later in the process.
4. Lock-out agreements
A lock-out agreement is when buyer and seller sign an agreement that means offers from any other buyers are not acceptable during a certain timeframe.
While this can afford you a degree of protection as a buyer, it will also cost you money as the agreement will need to be drawn up by a solicitor.
You’ll also have to convince the seller to sign it.
Speak to your solicitor before deciding on any kind of agreement such as this.
5. Home buyer’s insurance
If you don’t fancy the legality of a lock-out agreement, you could consider home buyer’s insurance to protect you against costs caused by being gazumped.
Gazumping often occurs late in the purchase process, meaning a buyer could already have spent a fair amount of money on things like conveyancing, mortgage arrangement fees and survey costs.
A home buyer’s insurance policy can protect you against these losses if you fear you may be at risk of being gazumped.
But bear in mind the policy will also cost you money, so this will need to be weighed up against the potential losses you would incur.