Gazumping is when a buyer has had an offer accepted to purchase a property by the seller but before the sale completes, the seller accepts an offer from another buyer leaving the first buyer in an awful situation.
If a seller decides to progress with the second offer, it can leave the initial buyer out of pocket by possibly thousands of pounds in survey costs, conveyancing fees and mortgage arrangement fees.
Gazumping is an extremely unfair way of going on when you are on the receiving end but unfortunately it is a perfectly legal process of the property buying procedure in England and Wales. An offer does not become legally bound until contracts have exchanged which can be around 12 weeks after the offer is accepted. Before exchange of contracts can take place, the property survey needs to be arranged, the conveyancer/solicitor needs to conduct the necessary searches and the buyer needs to be in receipt of a mortgage offer. During this time period it leaves both the purchaser and seller able to walk away from the agreement.
Within this time period, the seller is able to consider an offer from another party, which may be a higher offer or alternatively could be from a buyer who is in a position to move at a faster pace (cash buyer). This behaviour is rare and is more commonly seen in a buoyant market where there is a shortage of properties. The acting estate agent is obliged to report all offers at any point during the instruction.
What can you do to prevent being gazumped?
Mortgage in Principe!
Before you even start looking at properties make sure you have an ‘agreement in principle.’ This is a conditional offer made by a mortgage lender advising they will ‘in principle’ give you a mortgage up to a specified amount, providing certain conditions are met. GSC Grays work with a financial advisor who is more than willing to discuss your requirements, should you require a head start with your mortgage plans. Please contact one of our agency branches for further information.
Conveyancing Solicitor & Surveyor
It is worth considering which solicitor and surveyor you will use prior to offer acceptance so that when you do find your dream property, a solicitor is on hand to begin the searches etc immediately. GSC Grays have a Valuation & Surveys Department who are contactable on 01748 897611 should you require advice on a property you purchase through another estate agent or privately.
Once your offer is accepted, keep in touch with your solicitor and mortgage advisor on a regular basis. Make sure your mortgage valuation and/or survey are instructed at the earliest point possible.