What is gazumping?
If your concern was with dolly houses rather than the housing market last time gazumping drew media attention, you may be wondering what on earth this made-up sounding word is all about. Gazumping is when a seller of a property refuses to authorise their conveyancing solicitor to exchange contracts on their property because they've received a better offer.
For example, Fred has agreed to sell his house to Carrie for £120k, but before the sale is complete, Fred gets a better offer of £124k. Carrie must fork out the extra £4,000 or risk losing the house and all the money she's already put into the deal for solicitor's fees, surveys etc, which easily adds up to hundreds or even thousands of pounds. Carrie is the victim of a gazumping.
Gazumping is not illegal nor is it about to be any time soon, but there are steps you can take to help ensure that the seller of your dream home doesn't trick you out of it.
1. Get that property off the market
If other potential buyers don't know about the property then they can't put an offer in. Make sure that taking the property off the market is a condition of your offer. This will also help you spot a seller who is open to gazumping. If they want to keep their property advertised it may well be a sign they're hoping for a better offer, while keeping you on the back burner.
2. Sell yours first
One thing that leads sellers into accepting alternative offers is the dreaded delay. A major cause of delay is when the seller's buyer can't find a buyer for their property, or their buyers drop out. The property chain can make things difficult, so if you can, unchain yourself. Sell your property first and stay with family or friends - or rent until you can move in. Of course not everyone is in a position to do this. But at least making sure your property is under offer before you put your own offer in will help to reassure the seller that you mean business.
3. Exchange contracts ASAP!
Make it official fast to beat any potential gazumpers out there. The more proactive and efficient conveyancing services your solicitor provides, the quicker contracts will be exchanged and the calmer everyone will be.
4. Get a Lock Out agreement
As part of your conveyancing services you should be able to get a formal agreement drawn up to prevent gazumping. Speak to your conveyancing solicitor about Lock Out agreements. This is the most reassuring and, while not guaranteed, most effective method to avoid gazumping. A Lock Out agreement is a binding deed which ensures that your seller cannot sell to anyone else. As a buyer you will need to be ready to exchange contracts within a defined period and there will be a fee, but it'll be worth if for that perfect home.
5. Be your seller's friend
Finally, it may sound idealistic or even obvious, but maintain a positive, friendly relationship with your seller and hopefully they will find it harder to cheat you out of your deal and your money.
Gazumping is a nasty practice, but it does happen and everyone should be aware of it. While gazumping is more prevalent when the housing market is on the rise, it still occurs when the market isn't so strong, so it's important to always keep a vigilant eye out. Remember, your agreement isn't legally binding until it is in written form, so don't rely on the law to protect you from this particular type of dishonesty. For further guidance, speak to your conveyancing services provider.
Image Credit: This work has been released into the public domain by its author, Gregoryj77 at the wikipedia project. This applies worldwide
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