How does gazumping work?

Losing your dream home to gazumping is tough. You’ve spent time, money and energy getting everything lined up, only to have it taken away at the last minute — it’s unfair and incredibly frustrating. Sadly, in today’s housing market, gazumping is something many buyers face. While it’s legal in England and Wales, that doesn’t make it any less heartbreaking.

But you don’t have to deal with this alone. At The Property Buying Company, we’re here to help you bounce back. Whether it’s selling your house quickly or becoming a chain free buyer, we’ll make the process simple and stress free. By avoiding the delays and risks of a property chain, you’ll be in a stronger position to secure your next home.

On this page, we’ll explain what gazumping is, how it happens, and how it can impact you. More importantly, we’ll share tips to help you avoid it and move forward with confidence. Let’s turn things around and get you back on track!

How does gazumping work?

Gazumping happens when a seller agrees to sell you their house but then accepts a higher offer from someone else before contracts are exchanged. If you’re buying and selling a house at the same time, the impact can be even worse.

Being involved in a property chain means delays with financing, surveys or legal checks which can leave you vulnerable to someone swooping in with a  better offer. Sellers often find it hard to resist, even if they’ve already made a commitment to you.

It’s a disappointing reality of the housing market, but understanding how gazumping works can help you stay one step ahead and protect yourself from being left in the lurch. Here is how gazumping works:

1. Initial Offer and Acceptance:

A buyer makes an offer on a property, which the seller accepts, marking a verbal agreement.

2. Pre-contract Stage:

The buyer initiates the purchase process, potentially involving activities like:

• Arranging mortgage approval.

• Conducting property surveys.

• Incurring legal fees for conveyancing.

3. The Gazump:

During this pre-contract stage, another buyer emerges with a higher offer for the property.

4. Seller's Decision:

The seller, legally entitled to maximise their profit, has the option to:

• Accept the higher offer: This leaves the original buyer without the property and potentially facing financial losses from invested time and resources.

• Stick with the original offer: This scenario, while less common, happens if the seller values factors like good faith or avoiding delays caused by a broken chain.

5. Contract Exchange (if applicable):

If the seller sticks with the original buyer, the legal process continues, leading to the crucial stage of contract exchange. This legally binds both parties to the sale.

Once contracts are exchanged, gazumping becomes impossible.

Is gazumping legal?

While it may feel unfair, gazumping is legal in England and Wales until the crucial stage of exchanging contracts. This means that even after your offer has been accepted, the seller is legally free to accept a higher offer from another buyer.

In Scotland, however, offers become legally binding once verbally accepted, preventing gazumping.

It’s important to understand that accepting an offer doesn’t automatically create a legally binding agreement in England and Wales. This is why you’ll often see properties advertised as “Sold Subject to Contract” (SSTC) - the sale is contingent on contracts being formally exchanged.

Do estate agents encourage gazumping?

A common concern is whether estate agents encourage gazumping in order to receive a higher commission. 

While gazumping can benefit the seller by securing a higher sale price, it’s important to understand that estate agents are legally obligated to present all offers to the seller, even after the initial offer has been accepted. 

This is to ensure they act in the best interests of their client, the seller. However, it’s important to be aware of unscrupulous practices like:

• Fake offers: In rare instances, some unethical estate agents might fabricate higher offers to pressure buyers into increasing their bids.

• Undue pressure: Some estate agents might exaggerate the urgency of competing offers or create a sense of panic to nudge buyers towards overbidding. 

Luckily, there are a few ways that you can protect yourself from these tactics, like asking for proof, setting a budget and reporting any concerns to the relevant regulatory body. 

Remember, reputable estate agents prioritise ethical conduct and transparency. If you have any concerns, don’t hesitate to ask questions and address them directly with the agent.

What can you do if you are gazumped?

Being gazumped can be incredibly disappointing, and it can take an emotional toll on any buyer, first time or veteran house flipper. 

Luckily, there are still options that you can explore:

Reconsider your offer (carefully)

• Review your finances: Only if comfortable, consider a counter offer.

• Beware of overstretching: Don’t risk financial strain in the heat of the moment. 

• Remember: You could still be gazumped again.

Appeal to the seller (if you truly want the property)

• Understand their motivations: Learn why they’re selling and highlight your advantages as a buyer.

• Emphasise your benefits: being a cash buyer, offering a quick sale, or flexible moving dates can be appealing.

Move on and search for a new home

• Sometimes, the best option is to walk away: Don’t let gazumping discourage your search.

• Focus on finding a new property: Find a property that better suits your needs and avoids the risk of gazumping.

Why is a buyer pulling out due to gazumping a bad thing?

While gazumping can be tempting for sellers seeking a higher price, it's crucial to consider the potential downsides:

1. Risking a less reliable buyer:

The initial buyer, despite offering a lower price, might have been dependable, easy to work with, and pre-approved for financing. Accepting a higher offer doesn't guarantee the new buyer will be as smooth or reliable throughout the process. The new buyer could:

• Have financing issues: This could lead to delays, complications, or even the deal falling through entirely, causing the seller to waste time and potentially incur additional costs.

• Be more demanding: The seller might face stricter deadlines or more negotiation hurdles, causing additional stress and potentially forcing concessions they wouldn't have needed to make with the original buyer.

2. Damaging market reputation:

If a seller gains a reputation for gazumping, it can deter future serious buyers from engaging with them. This could:

• Limit the pool of potential buyers: Fewer interested buyers could lead to a longer selling process and potentially lower offers overall.

• Raise concerns about trust and reliability: Buyers might be hesitant to invest time and resources in a property they fear could be taken away at the last minute due to gazumping.

3. Facing ethical concerns:

Some sellers, even if tempted by a higher offer, might feel unethical about gazumping, especially if they had already established a rapport with the initial buyer. This discomfort can create:

• Internal conflict: The seller might struggle with the decision, leading to unnecessary stress and potentially impacting their overall satisfaction with the sale.

• Strained relationships: The initial buyer might feel betrayed or mistreated, potentially damaging the seller's reputation and hindering future business relationships.

4. Uncertain outcomes:

Even after accepting a higher offer, there's still a chance the deal could fall through due to various reasons unrelated to the initial buyer. These could include:

• New buyer's financing falling through

• Unexpected issues with the property inspection

• Changes in the new buyer's circumstances

If the deal falls through after gazumping, the seller is back to square one, potentially facing delays in their own plans and incurring additional marketing costs.

While the allure of a higher offer is understandable, it's essential for sellers to weigh the potential risks and drawbacks of gazumping before making a decision.  Choosing a reliable buyer and a smooth transaction might be a more strategic approach in the long run.

What to do if your buyer pulls out due to gazumping?

While frustrating, encountering a buyer who pulls out due to gazumping is not uncommon. Buyers generally pull out due to gazumping for one key reason: a higher offer emerges. This higher offer entices the seller to accept it instead of the original buyer’s offer, effectively pushing the original buyer out of the purchase. 

Here are some steps you can take to recover from a reliable buyer pulling out of your sale:

1. Understand the Situation:

Contact your estate agent to verify that gazumping is the reason the buyer is pulling out.

Consult your solicitor to understand your legal options and any potential claims you might have based on the terms of the contract.

2. Explore Options:

If you're truly attached to the buyer, consider counter-offering their higher offer to secure the sale. However, only proceed if it aligns with your financial comfort zone. If renegotiation isn't an option, you can choose to re-list the property with your estate agent. Consider strategies like:

• Competitive Re-listing: Price the property strategically to attract serious buyers quickly.

• Highlight Unique Features: Emphasise the property's unique selling points to stand out from similar listings.

• Consider Open Houses: Host open houses to generate interest from potential buyers.

If you have received other offers during the initial sale process, revisit them and see if any are still viable options.

3. Mitigate Losses (if applicable):

If you have home seller protection insurance, contact your provider to understand if any cover applies to your situation and the claims process.

If the buyer's withdrawal caused you significant inconvenience or financial loss, you might be able to negotiate compensation through your solicitor, especially if the contract had specific clauses regarding gazumping.

4. Consider a cash house buyer

If you have lost all potential buyers, and you need to sell quickly, you may want to consider selling to a cash house buyer like ourselves. Although we operate a Below Market Value property purchasing service, we do offer a completely transparent and honest process that will keep you in the loop at all times. 

Thousands of people have sold their house with us over the past 12 years, and we have thousands of excellent reviews to back that up. Not just this, but we can buy your house in as little as seven days, for cash, helping you to move on quickly. 

We don’t judge, and deal with properties of all sizes, prices, locations, circumstances and conditions. As long as it has a roof and a front door, and the possibility of being renovated, we will buy your house for cash. 

Want to sell your house fast, and for free? Put your postcode in the form below to receive our no-obligation cash offer direct to your inbox.

How can we help?

Being gazumped can feel like a huge setback, but don’t worry — we’re here to help you get back on track. We can make selling your house quick, simple and stress free, so you can move on with confidence and a clear plan.

By selling to us, you’ll have a guaranteed buyer and could complete in as little as seven days. This puts you in a strong position as a chain free buyer – something sellers love and that can give you the edge in a competitive market.

We take care of all the legal and admin hassle for you, so you can focus on your next steps without the stress. Our process is designed to be easy and straightforward, with no hidden fees or last minute surprises.

We’ve seen how tough situations like this can be, and our team is here to support you every step of the way. With a guaranteed offer from us, you won’t have to worry about uncertainty or being let down again.

Ready to take control? Just pop your postcode in below, and we’ll help you sell your house this week. Let’s turn things around together!