Gazumping explained

What is gazumping?

Gazumping is when a seller accepts your offer on a property, but then backs out after accepting a higher offer from a different buyer.

It's most common in areas where there is more demand for property than supply, with multiple buyers competing for the same home - even after the seller has accepted an offer.

When you're gazumped, you not only lose the house or flat but also any money you've spent on applying for a mortgage, conveyancing and a property survey.

Video: gazumping explained

You can find out how gazumping works in our short video.

Is gazumping illegal?

Gazumping isn't illegal in most parts of the UK, as the initial agreement to buy and sell a property isn't binding until contracts have been exchanged. This means the seller, and the buyer, can change their mind and pull out of the deal at any point before exchange.

• Gazumping is less common in Scotland: read our guide on buying a property in Scotland to find out why.

Estate agents are legally obliged to pass all offers they receive on to the seller. This means if someone makes an offer on the property, the agent has to let the seller know, even if an offer has already been accepted.

How to reduce your chances of being gazumped

Unfortunately, there's no sure fire way to avoid being gazumped, but if you follow these steps you can make it less likely to happen to you.

1 Before you make an offer...

• Present yourself in the best possible light so the seller knows you can proceed quickly, and aren't likely to pull out of the purchase. Our guide on making an offer is packed with tips on this.
• Consider getting a mortgage agreement 'in principle'. This will reassure the seller and the agent that you can borrow enough to buy the property.
• If you're selling your property too, secure an offer on your current home before making an offer on a new one, so the vendor knows you're ready to proceed.

2 When you make your offer...

• Tell the estate agent your offer is subject to the property being taken off the market, with no more viewings conducted.
• Ask the agent to change the online listing and 'for sale' board to say 'under offer' or 'sold subject to contract'.

While the seller and their estate agent aren't legally obliged to do either of these things, you should question their reasons if they refuse - it could indicate the seller is holding out hope for more money.

3 After your offer is accepted...

• Keep chasing things up with your solicitor (or conveyancer) and the estate agent, and make sure you read, sign and return any forms and paperwork as quickly as possible.
• Be nice - if you stay on good terms with the seller, they might be less likely to accept another offer.
• Consider drawing up a contract saying that both parties will exchange within a particular timeframe. This can reduce, but won't eradicate, the chance of being gazumped as there will be a smaller window for another offer to be made. Your contract could also stipulate that if the seller backs out, they'll pay you an agreed amount as compensation.

Find out more: the process of buying a house

Exclusivity agreements

In highly competitive markets - or when you're desperate to secure a property - you might consider drawing up an exclusivity agreement. Under this type of contract you pay the seller a fee, in exchange for sole rights to negotiate over the property for a set period of time.

It's recommended a solicitor does this for you, as it can get fairly complex. Even with an agreement in place, there's a small risk of the seller delaying completion until the exclusivity period is up, before walking away from the deal and selling to another buyer - though this is unusual.

There are also a number of specialist insurance providers that cover the loss of fees, such as conveyancing, survey, valuation and mortgage fees. But you should read the policy wording carefully, as there are always limits and exclusions to any cover.

• Find out more: the costs of buying a property

What to do if you're gazumped

If you hear from the estate agent that another buyer has made a higher offer, all may not be lost.

It can often help to highlight anything you have in your favour - for example, if you're chain-free (eg a first-time buyer with no other property to sell) or a cash buyer who doesn't need a mortgage. Time is more important than money for some sellers, and if sticking with you is likely to mean the sale completes more quickly, they may well do so.

If this doesn't work and you still want the property, you could consider increasing your offer to match or beat the new buyer. However, you shouldn't feel pressured into paying more than you can afford, more than the property is worth or more than your mortgage lender has offered you. Even if you miss out this time, you'll be better off holding out for another property that's within your budget.

Besides, there's no guarantee the other buyer will actually go through with their purchase. Keep in touch with the agent so they can let you know if the sale falls through.