In the world of property-buying there are few things more irritating than being gazumped. Once your offer has been accepted by the seller it may seem as though nothing can stand in the way of the sale going through. Unfortunately, however, it is perfectly legal for another bidder to come in with a higher offer, thus gazumping your offer.
However, for some, gazumping is justifiable within the game of buying and selling. Whichever side of the fence you stand, you should know the pros and cons of gazumping in order to make up your mind about this practise.
In this article we will look at the arguments for and against gazumping, plus we will look at some alternatives.
We also look at how the home buyer can protect themselves against losses incurred if they fall victim to gazumping or the vendor withdraws the property for other reasons after a sale agreement has been reached.
Arguments for gazumping
It’s totally legal – While suggestions have been made for a clampdown on regulations in order to make gazumping harder, it is currently totally legal due to the fact that the agent is required by law to present all offers to the seller in writing. Some would question why gazumping should be frowned upon when it is entirely legal to do so.
Get the house you want – If you have found your dream home you may ask why you shouldn’t pull out all the stops to make it your own. If your search has been going on for years and you are now convinced that you have found your perfect property then you might believe you are well within your rights to stop at nothing to make it your dream home.
It is fair that the home goes to the highest bidder – The property owner will likely be looking for the highest possible offer. A gazumper would argue that If you are able to pay more than the other would-be buyer then it’s only fair that you should get the house.
Arguments against gazumping
Moral scruples – Many of us would wince at the thought of depriving someone of their dream home by coming in at the eleventh hour with an offer to gazump the previously agreed price. Whether or not you believe in karma, you may feel that gazumping is simply not morally justifiable.
Gazumping may not be possible – It might be the case that your gazumping will be in vain if the homeowner has signed a lockout or exclusivity contract with the potential buyer. A lock-out clause would mean that the homeowner would be prevented from accepting any higher offers after the agreement has been made, therefore, your gazumping will come to nothing.
You might be gazumped yourself – If you have no qualms about gazumping others you can hardly be outraged when you find that you yourself are gazumped. In this case the old adage: “Do unto others as you would have them do unto you”; springs to mind.
Gazumping might cause others to look unfavourably upon you – This may not be of any significance, however, if the property owner or estate agents look unfavourably upon your approach, you may be less likely to get your own way with other aspects of the sale such as the moving date, etc. Gazumping another potential buyer can create an atmosphere of suspicion and mistrust which can be hard to dissipate.
Protection against Gazumping
Research carried out by Which shows that one in three house sales fall through as a result of gazumping or other reasons. Leaving many homebuyer out of pocket over legal fees and survey fees. These fees can be substantial, but protection is now available if the form of home buyers protection insurance. Home Buyer’s Protection Insurance cost is inexpensive and allows you to recoup your costs if the sale does fall through. Check out more about how home buyers protection insurance works to recoup your losses.
The other side of the coin
If you are a homeowner the benefits of gazumping are obvious. it is natural to want the best price possible for your property. However, if you have moral misgivings you may decide not to cooperate with a gazumper.
You should think carefully about whether or not to accept a higher offer and allowing the other sale to fall through. While a higher offer may indicate that the gazumper wants the property more than the original successful bidder, it may also indicate that the gazumper lacks integrity, and therefore, may be more prone to dropping out during the process leaving you high and dry.
You may also find that your hopes of a quick and easy sale are dashed once you have accepted an offer from the gazumper. A truly brazen individual who has gazumped another offer may then decide to gazunder their own offer before the contracts have been exchanged!
This can be disastrous and has the potential to collapse an entire chain of property sales leaving you to start from scratch. Therefore, you should think very carefully before accepting an offer from a gazumper.
If you, as a homeowner are unwilling to go through the emotional upheaval of gazumpers there are some ways to avoid the possibility altogether.
Selling at auction is one way to make a quick sale. However, make sure to do your research as you will undoubtedly be up against very experienced investors. Being fully prepared is absolutely vital if you are considering selling at auction.
Furthermore, part-exchanging is another way to avoid the stress of gazumpers and gazunderers as you will be cooperating with a housebuilder directly rather than another homeowner who may have a hidden agenda. Offering your property at a single fixed price might be another way to deter gazunderers and gazumpers as the price of your property will be fair and transparent from the outset.
Buying and selling properties doesn’t have to be a fraught, complicated process. For those looking for a quick sale, LDN Properties offer a direct and reliable purchase of properties in the UK.
To sum up, we hope that this article has given you the full picture of gazumping. Whether you are buying or selling, it is important that you know the facts about gazumping and its consequences.