What is Gazumping and How Can You Avoid This Property Pitfall?
Ever heard the term 'gazumping' and wondered what it meant? This common UK property headache can turn your dream home into a nightmare. Let us explain what it is and, more importantly, how you can steer clear of it.
...Imagine this:
You have found your perfect home in Harborne, your offer has been accepted, and you are already picturing your new life. Then, out of the blue, another buyer swoops in with a higher offer, and the seller accepts it, leaving you high and dry. That, my friends, is gazumping in a nutshell.
What Exactly is Gazumping?
Gazumping occurs when a seller accepts a higher offer from a new buyer after they have already verbally agreed to sell their property to someone else. Crucially, in England and Wales, a property sale is not legally binding until contracts are exchanged. This means that until those papers are signed, either party can pull out without penalty. It is a frustrating, albeit legal, practice that can cause significant stress and financial loss, especially if you have already invested in surveys or legal fees.
Why Does Gazumping Happen?
While it feels unfair, sellers might be tempted by a higher offer, particularly in a competitive market like parts of Birmingham. They might also be under pressure to achieve a certain price or simply be looking to maximise their return. From a purely financial perspective, it is understandable, but it certainly does not make it any easier for the original buyer.
How Can You Protect Yourself from Gazumping?
While there is no foolproof way to completely eliminate the risk of gazumping, there are several proactive steps you can take to minimise your chances of becoming a victim:
1. Act Quickly and Efficiently
Speed is your ally. Once your offer is accepted, instruct your solicitor immediately. The faster you can get the legal process moving, the less time there is for another offer to come in. Ensure your mortgage is pre approved, and have your finances in order so there are no delays on your end.
2. Request the Property be Taken Off the Market
Ask the estate agent to remove the property from all online portals and 'For Sale' boards once your offer is accepted. While this is not legally binding, it signals to other potential buyers that the property is under offer and can deter further enquiries. A good Harborne estate agent will understand the importance of this.
3. Get a Lock Out Agreement
A 'lock out agreement' or 'exclusivity agreement' is a formal, legally binding document where the seller agrees not to negotiate with other parties for a specified period, usually 28 days. While it costs money and does not guarantee the sale, it provides you with a window to progress the purchase without fear of being gazumped. It shows serious intent from both sides.
4. Build a Good Relationship with the Estate Agent
A strong, transparent relationship with the estate agent can be invaluable. Keep them updated on your progress and show them you are a serious, reliable buyer. A good estate agent, like us here in Harborne, will work hard to ensure a smooth transaction for all parties and will often advocate for the original buyer if they are progressing well.
5. Be Prepared and Organised
Have all your ducks in a row. This includes your mortgage in principle, solicitor details, and any necessary funds for deposits or fees. Being organised demonstrates to the seller and their estate agent that you are a committed buyer, reducing the likelihood of them looking elsewhere.
6. Consider a Higher Deposit
While not always feasible, offering a slightly higher deposit can sometimes make your offer more attractive and demonstrate your commitment, potentially making a seller less likely to entertain other offers.
The Expert Advantage
Navigating the property market, especially around areas like QE Hospital and Birmingham University, requires local expertise. As Harborne based estate agents, we understand the nuances of the Birmingham market and work tirelessly to ensure our clients experience a smooth, transparent, and successful sale or purchase.
If you are looking to sell your property in Harborne or the wider Birmingham area, and want an award winning service and agents that will lead you through each step of the way, give us a call on 0121 681 6327. Alternatively, get a free, no obligation valuation today at valuation.mecsproperty.co.uk. Let us help you avoid the pitfalls and achieve your property goals with confidence and a touch of humour!