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Gazumping -heart broken showing the pain caused by gazumping.

Gazumping

Gazumping is a term that sends shivers down the spines of buyers and sellers in the UK property market. It’s a phenomenon where a seller accepts a higher offer from another buyer after accepting an offer from someone else, effectively leaving the original buyer high and dry.

Reflecting on my early days in the property market in the late ’80s / early ’90s, I recall a time when a handshake was a symbol of a solid deal. However, the landscape has changed dramatically since then, and gazumping has become a common occurrence, often leaving buyers and sellers in a state of uncertainty.

Hand shake was enough but not any more - now it's not enough to prevent gazumping

The Rise and Fall of Gazumping

To understand whether gazumping is making a comeback, it’s essential first to examine its history.

Gazumping is common during property market booms when demand outstrips supply and prices are skyrocketing. In such a competitive environment, sellers are often tempted to accept higher offers even after agreeing to a sale, leaving prospective buyers frustrated and disillusioned.

The UK government introduced measures to combat gazumping in response to widespread outcry. These included the failed introduction of the Home Information Pack (HIP) in 2007, which aimed to provide buyers with more information upfront and reduce the likelihood of last-minute surprises.

The idea was to speed up the legal process of buying a house, thereby reducing the time a buyer and seller had without certainty.

Gazumping - home information pack

The best homes take work to come by. Homes that rarely come to the market or are unique in their setting are prone to sellers looking to capitalise on their perceived power within the struggle buyers face to find such a home.

At the time of writing, gazumping is back within specific price points and markets where desirable homes are hard to come by.

Even as a buying agent, due to us finding the best and most desired property, both on and off-market, we have, on occasion, had to combat this. Usually, with our client’s trust, we will, when challenged, succeed where others who are not represented fail, but not always.

Sometimes, an unrepresented buyer will get caught up in the moment and pay way over the odds, gazumping a buying agent’s client. However, in almost all cases, the buying agent, with an unemotional business head, advises their client not to overpay, as they will have other options up their sleeve.

To be clear, Gazumping is not being outbid at sealed bids (an often unpopular process where buyers must put forward their best bid when offering on a property), nor is it gazumping if a seller has agreed to accept your offer on the basis that it remains entirely on the market due to your offer either being uncomfortably low, or you are not yet in a position to conclude a purchase.

Gazumping is restricted to when a seller has agreed to accept a bid, the property has been removed from the market and all parties have agreed to move forward towards an exchange of contracts.

Gazunder - setting fire to a loved house - guzumping

Gazundering

Much the same can be said for the less known word but far more frequent phenomenon of Gazundering. The process whereby a buyer reduces their offer at the last minute for no apparent reason other than them holding the balance of power.

For some reason, it is commonly reported in the press and other such outlets that Gazumping is bad without mention of the equally abhorrent Gazunder.

I can only guess that this inequity is a result of actions such as the perceived setting of high or unreasonable asking prices, creating an excessive profit for sellers and their agents, whereas buyers (who, perversely more often than not also sellers), are having to suffer forever higher pricing.

Again, for clarity, gazundering is not lowering a negotiated offer based on reasonable grounds revealed in a survey. If, following a survey, the sellers would have to make good a fault to facilitate a sale at the agreed price should the house re-enter the open market, it is as acceptable to expect some reduction on the final agreement.

EPC - Gazundering

The Resurgence of Gazumping

While it is reported that gazumping may have declined in the years following the introduction of tighter regulations, activity on the ground would suggest otherwise.

The HIP failed. The only remaining part of the HIP is the EPC (Energy performance certificate), a European legislated chart that advises on the environmental impact a property has and improvements that can be made.

One contributing factor is the resurgence of a seller’s market in certain areas or pricing, driven by factors such as low housing supply and high demand from buyers. In such competitive environments, less scrupulous sellers may be more inclined to entertain higher offers, even after accepting an initial offer.

It is still the case that when there are more buyers than sellers, sellers are often tempted to accept higher bids, even after agreeing a sale.

Buyers who have missed out on a house may either have their viewings cancelled by agents or spot a home on the internet as sold. Not willing to miss out, they will often write to the seller or knock on the door of the house being sold, fully aware that their actions may lead to devastation for another family.

The question is, would you, as a seller, stick to your agreed terms, or would you be tempted to accept a higher offer if presented to you? An estate agent must, by law, forward every offer made to them to their client, even if it is from a buyer who hasn’t even seen the house.

Internet portals - gazumping

The Role of Technology

Technology has played a role in the resurgence of gazumping, with online property portals and instant communication tools making it easier for sellers to field multiple offers simultaneously. In today’s digital age, a seller can receive and respond to offers within minutes, potentially leading to situations where a higher bid later trumps an accepted offer.

Properties are also visible as Sold or Under Offer well beyond when a sale is agreed, thereby leaving temptation open to abuse.

Devastation caused by gazumping

The Impact on Buyers and Sellers

For buyers, gazumping can be a frustrating and disheartening experience. After investing time and effort into finding the perfect property and negotiating a deal, being gazumped can feel like a betrayal.

It can also have practical implications, such as wasted money on surveys and legal fees and delays in finding another suitable property. Given that many people move for schooling or jobs, this can devastate and impact an entire family.

For sellers, the temptation to entertain higher offers can be understandable, especially in a competitive market where they stand to make a substantially increased profit.

However, engaging in gazumping can damage their reputation and deter future buyers from doing business with them. It can also delay the selling process, as the original buyer may seek legal recourse or simply walk away from the deal altogether.

It is also my experience over more than three decades and thousands of properties that both those who allow a gazump and those who facilitate a gazump or gazunder are often as unlikely to stick with their now agreed deal as they were when they reneged or destroyed another family’s dreams. These deals should not be trusted.

Worry over an agreed deal - caused by gazumping

The Future of Gazumping

As the property market in the UK continues to evolve, gazumping will likely remain a contentious issue for buyers and sellers alike. While tighter regulations and increased transparency have helped mitigate the practice to some extent, competitive market conditions and technological advancements present ongoing challenges.

Moving forward, striking a balance between protecting the interests of buyers and sellers while fostering a fair and efficient property market will be key to addressing the resurgence of gazumping.

How to avoid a Gazump or Gazunder

It always amazes me how many people are prepared to perpetrate an act on someone else, that they would hate happening to them. But that is human nature, and it seems that where we have much to gain, our morals often take a back seat despite the pain to others.

While gazumping may seem daunting, there are steps that buyers can take to minimise the risk of falling victim to this reprehensible practice. By being proactive and vigilant throughout the buying process, buyers and sellers can protect themselves and increase their chances of completing a property transaction.

Here are some tips on how to avoid being gazumped or gazundered.

Relationships

Build trust between the selling agent and seller. The more they trust you and believe you will not renege on them, the greater the chances are that they will stick to what they feel safest with.

A buying agent (property finder) will have built up these relationships over many years, and although they can’t prevent a seller from accepting a higher offer, a buying agent will have had years of practice at ensuring the least risk possible, both in their capacity as an agent and in their current buying agent roll.

images of a kind looking couple agreeing to sell their home - offering on a house

Unique Property

By avoiding advertised property, a buying agent will often find properties uniquely available to their clients, thus evading predator competition.

This doesn’t avoid shenanigans from the seller, who may look for more than the house is worth. Still, it does mean that negotiations are one-to-one without complicated additional competition.

Best and final offers - sealed bids - closed bids

Act Quickly

In a competitive market, time is of the essence. Once you’ve found a property you’re interested in, don’t hesitate to offer. Delaying your decision could allow other buyers to swoop in with higher offers, increasing the likelihood of gazumping.

Get Everything in Writing

Ensure that all agreements, including the offer price and any conditions, are documented in writing. This helps to establish a clear record of the terms agreed upon by both parties and reduces the likelihood of misunderstandings or disputes later on.

Request an Exclusivity Agreement

Consider asking the seller to sign an exclusivity agreement, also known as a lockout agreement, which prevents them from entertaining other offers for a specified period. While not always feasible, especially in highly competitive markets, an exclusivity agreement can provide buyers with added peace of mind.

Conduct Due Diligence

Thoroughly research the property and its surrounding area before making an offer. This includes obtaining a professional survey to identify any potential issues with the property and researching local market trends to ensure that your offer is competitive.

Outstanding support network

Be Prepared to Move Quickly

Have all your finances in order and be prepared to move quickly once your offer is accepted. This means having a mortgage agreement in principle in place, as well as funds readily available for the deposit and other associated costs.

Stay in Regular Communication

Maintain regular communication with the seller and their estate agent throughout the buying process. This helps build trust and ensures that you’re informed of any developments that may impact the sale.

Consider Making a Higher Offer

While it’s essential to stick to your budget if you’re genuinely committed to a property and believe it’s worth it, consider making a slightly higher offer to deter other potential buyers. However, be cautious not to overextend yourself financially.

Seek Legal Advice

Finally, consider seeking legal advice from a solicitor experienced in property transactions.

Ensure you choose a solicitor who can move fast and get to an exchange as soon as possible. There is no point in opting for the cheapest solicitor if they will not act at speed. In a frustrating market, your goal is to exchange, locking in the purchase in the fastest time possible.

A good solicitor can help you navigate the buying process, review contracts, and advise you on the best action to protect your interests.