Ah, gazumping – the sneaky property game-changer that’s driving buyers up the wall in 2024.
You’ve found your dream home, shaken (metaphorical) hands with the seller, and popped the bubbly to celebrate.
Then, out of nowhere, another buyer swoops in with a higher offer, and you’re left picking up the pieces – and the tab for surveyors and solicitors. But what exactly is gazumping, why is it on the rise, and is there anything you can do to avoid it? Let’s dive in.
What on earth is gazumping?
Gazumping happens when a vendor agrees to sell you a property, but before contracts are exchanged, they ditch your offer for someone else’s. Usually, it’s because said someone has waved a bigger cheque under their nose. It’s frustrating, stressful, and at worst can cost you a small fortune in wasted fees for surveys and local searches – not to mention a big hit to your pride.
Why is gazumping back in 2024?
The property market is heating up thanks to recent Budget announcements, and gazumping is becoming a frequent headline-grabber. In Worcestershire and the West Midlands, in particular, we are seeing a sharp rise in cases. According to a 2024 survey, a staggering 53% of buyers in the West Midlands have been gazumped, up from 32% in 2022. That’s higher than even London – who saw that coming?
Nationwide’s House Price Index recently revealed that house prices jumped by 1.2% in November, with annual growth hitting 3.7%. Add to that a shortage of homes for sale and heightened competition, particularly with a stamp duty deadline to meet (feels like we’ve been here before doesn’t it!) and you’ve got the perfect storm for gazumping.
The human cost of gazumping
Being gazumped isn’t just a kick in the teeth; it can leave a real dent in your wallet too. Surveys, solicitor fees, and mortgage arrangement costs? All money down the drain if the seller ditches you. And then there’s the emotional blow. Whether it’s your first step on the ladder or your dream forever home, losing it to gazumping can leave you scrambling to start all over again.
Can you avoid gazumping?
The bad news? There’s no surefire way to avoid being gazumped.
In England and Wales, a sale isn’t legally binding until contracts are exchanged, meaning that – while frowned upon – gazumping is, annoyingly, completely legal and sellers are free to entertain other offers. Estate agents, for their part, are allowed – and sometimes encouraged – to push for higher bids to benefit their clients (and let’s be honest, their own commission). In Scotland, they’ve got their act together with a different legal system that means instances of gazumping are much fewer and further between.
The good news? There are a few tricks to massively reduce your risk of being gazumped. Here’s what you can do:
1. Be ready to go
Make yourself the dream buyer. Have your mortgage in principle sorted and a solicitor lined up before you even make an offer. Sellers love a buyer who can move quickly – it’s less faff for them, especially if they are in a chain themselves.
2. Keep the seller sweet
Stay in regular contact with the seller (and their estate agent). Show you’re serious and committed. Sometimes, a bit of friendly chat and trust-building can help deter them from jumping ship for a few extra quid from an unknown entity.
3. Suggest a lock-in agreement
A lock-out agreement – aka an exclusivity agreement – means both you and the seller commit to the sale within a set timeframe. It’s not super common, but if you’re really worried about being gazumped and will need to pay a significant sum to progress the sale before contracts are exchanged, it could be worth exploring.
4. Act fast
Delays can leave the door wide open for another buyer to swoop in. Once your offer is accepted, crack on with getting surveys, searches, and contracts sorted. The faster you move, the less time there is for someone to outbid you.
5. Specialist finance
If time is your biggest hurdle, consider using bridging finance to close the deal quickly. It’s not for everyone, but for those with complex transactions or tight timelines, a bridging loan can be a lifesaver.
6. Have a back-up in mind
Even if you think you’ve found your dream property, it pays to have a back-up in mind just in case things fall through and to keep you getting too emotionally attached. Don’t cancel existing viewings for other properties even if you think you’ve found “the one” and keep in touch with local estate agents so you know what else is out there. It also pays to keep track of properties you may have missed out on previously in case a sale falls through.
The bottom line
There has been growing pressure to reform the property purchase process to make gazumping a thing of the past, but while the government’s Levelling Up Committee is looking at ways to improve the homebuying process, changes aren’t happening overnight. For now, gazumping is just another annoying reality of the UK’s housing market.
So, while you can’t guarantee you’ll be able to completely avoid being gazumped, you can take steps to protect yourself by being prepared, acting fast, and staying on top of the process. And if you do get gazumped? Don’t beat yourself up. It’s a dog-eat-dog market out there, and you’re far from alone.
