Gazumping is back and Londoners are the most likely to have their dream home wrenched away at the last moment. But there are a few ways to protect yourself.
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The return of gazumping
Gazumping has returned to the UK property market over the past two years and the number of people affected is soaring, according to new research.
A survey by online estate agent eMoov.co.uk has revealed that the number of homebuyers reporting that they have been gazumped has increased from 13% in 2015 to 36% in 2017.
“Unfortunately, it would seem the practice of gazumping is once again becoming more prominent as market values continue to climb higher,” says Russell Quirk, the founder and CEO of eMoov.co.uk.
What is gazumping?
Gazumping, or outbidding a competitor on a property during the buying process, is a modern phenomenon.
Gazumping happens when a buyer has an offer on a property accepted by the seller, only for the seller to pull out at a later date because they have received a better offer from someone else.
Here's an example: let's say Jim offers £150,000 (the asking price) for a flat and his offer is accepted. A second buyer then comes along and makes a higher offer (£152,000) on the same flat – and Jim is told that the seller has decided to take the higher offer, unless Jim can match or beat it.
So even though Jim had agreed a sale with the seller already, he now finds he must either fork out another £2k+ or risk losing not just the flat, but any money he's already spent on solicitor's fees, land searches, surveys etc, which can easily add up to hundreds (or in some cases thousands) of pounds!
It's a hideous situation and one none of us would like to find ourselves in.
Gazumping danger zones
Unsurprisingly London is the place where buyers are most likely to be gazumped with 35% of buyers in the capital saying that it has happened to them.
Figures fall dramatically outside the capital with the South East being the next most likely place to be gazumped with 16% of buyers reporting their seller dumped them for a better offer.
“The London market remains the most cut throat by a long shot, however, buyers are still being gazumped nationwide,” says Quirk.
|
UK region |
% of gazumped homeowners |
Average house price |
|
London |
35% |
£481,345 |
|
South East |
16% |
£315,807 |
|
North West |
9% |
£153,807 |
|
West Midlands |
7% |
£167,555 |
|
Yorkshire and Humber |
6% |
£155,268 |
|
East of England |
6% |
£284,097 |
|
South West |
5% |
£243,969 |
|
East Midlands |
4% |
£180,903 |
|
North East |
4% |
£126,738 |
|
Wales |
4% |
£149,817 |
|
Northern Ireland |
2% |
£124,007 |
|
Scotland |
1% |
£143,106 |
However, there are parts of the country where sellers are a lot less likely to pull out of a sale due to a better offer. Only 1% of buyers reported being gazumped in Scotland, and only 2% in Northern Ireland. With gazumping only affecting 4% of buyers in Wales too it seems the English are the most likely to gazump their buyers.
“Traditionally it becomes rife in over inflated markets where high demand, and higher prices, push buyers to resort to dirty tactics in their desperation to secure the property they want,” says Quirk.
“In the last few months, the market across the UK and London has cooled due to levels of uncertainty with the addition of a fall in stock levels, but despite this there are pockets of the capital, and elsewhere around the UK, that has remained hot where buyer demand is concerned.”
So how can we help to avoid the risk of gazumping?
Insist the property is removed from the market
Sell your property before buying another
Sellers may be more inclined to accept an alternative offer if there are delays in their sale, especially in a rising market. A major reason for delay is often that the seller's buyers can't find a buyer themselves. By making sure your property is at least under offer before putting in an offer you can help to reassure them that you're serious.
Ideally, if you can, consider selling your property completely and either staying with friends/family or renting before putting an offer in – as an effective cash buyer without a chain to potentially collapse you'll be seen as a very strong candidate.
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Exchange contracts as quickly as possible
And on that note, the quicker the sale, the less time anyone has to gazump you. Make it your mission to keep everything moving as swiftly as possible. Make frequent calls to your solicitor to monitor progress, fill out required forms quickly and chase up anything you can.
Also, don't ignore the estate agent once things are proceeding – make sure you inform him when you've got a formal mortgage offer and when the survey has been completed. He can then feed this back. Remember, he wants to get the property off his books as quickly as possible too, so make him earn his fee.
Maintain a good relationship with the seller
Although it may sound idealistic, if you've got a good rapport with the seller in most cases he'll be less likely to let you down by accepting a rival bid.
Extras
Finally, although this may not work in practice, try and buy through an estate agent who has a policy on gazumping. Some do insist that sellers sign an agreement to turn down any offers once one has been accepted. You can also take out insurance to protect you, should your sale fall through.
And a more formal exclusivity agreement or contract can be drawn up by a solicitor to give you exclusive rights to the property, should the sale occur during an agreed timeframe. This will obviously involve a fee, but you might just think it's worth it.
Gazumping is clearly a horrible practice and one we should all be aware of. However, it's also something that tends to occur more in a rising property market.
But if you are unfortunate enough to be gazumped, one thing you can do is keep in contact with the agent and let him know how much you liked the property. If something should fall through with the gazumper's sale you'll be first in the queue. But of course, you may well have decided you'd rather not deal with that seller again....
Good luck with your property purchase!
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