Last week a survey commissioned by Market Financial Solutions – a bridging lender – found that the one change in housing policy that potential home buyers would like the most is for gazumping to be banned.
In case you’re not familiar with the term, gazumping is when you are in the process of buying a house, you have made an offer which has been accepted and you are in throes of finalising the process and planning your move – but then another party comes in and makes a higher offer on the property and has their offer accepted – effectively ejecting you from the process and setting you back to square one.
What is gazumping?
For home buyers, gazumping is a horrible experience as you not only lose time and money but also the emotional investment you have made in finding your dream home. You may have already imagined yourself living there and started picking out furniture etc, only to have the rug ripped out from beneath your feet. A truly unsettling experience.
Gazumping can happen at any time up until you have exchanged contracts and in the majority of cases it happens because the seller has received a higher offer – but it can also happen because of timing – for example if you’re taking too long to get a survey done, your house hasn’t sold yet or your solicitor is dragging their feet – then the home owner might reject your offer and go with a cash buyer or someone who is in a better position to move quickly.
According to the survey, 55% of home owners and renters hate the practice of gazumping and since the exchanging of contracts comes fairly late in the sales process – after you have spent money on surveys, arranging a mortgage and paying a conveyancer for local searches – you could find yourself seriously out of pocket if you are gazumped at the last minute.
How to avoid being gazumped
There are a few things you can do to minimise the risk of being gazumped. You can get home buyer protection insurance to protect yourself against any out of pocket costs if the seller changes their mind – including conveyancing and survey fees. You could also ask for the property to be taken off the market once your offer has been accepted. Sellers are not always keen to do this but if the property is no longer advertised, there is less chance of someone spotting it and trying to outbid you, so it is worth asking. It is also advisable to move as quickly as you can and get all of your surveys and other procedures done as soon as possible. If the worst comes to the worst and you do get gazumped then you can also make a higher counter offer – but make sure that you have enough money to cover the offer – and be aware that you might get gazumped again if the other buyers are really keen!
Of course this is just one side of the coin – if you’re selling your house, you’ve accepted the offer and the buyer is dragging their heels you might want to take another offer to avoid losing your own place in a chain. It is a complex process and just because 55% of respondents think it should be banned – there are 45% out there who don’t think it should.
Speaking about the survey results, CEO of Market Financial Solutions, Paresh Raja, said:
“Whether you’re a renter looking to make your first purchase or a home owner trying to move up the property chain, the UK property market is facing a number of important challenges.
‘The research findings clearly demonstrate the public’s desire to have new laws introduced to prevent gazumping, and in turn, reduce the risk of a property chain collapsing.”
Have you ever been gazumped? Do you think it’s fair? If a buyer was dithering and slowing down your home move would you be tempted to go with another buyer? Let us know your experiences in the comments section below – and if you’ve exchanged contracts and you’re ready to make that move then get in touch to see how Northover and Gilbert can help your move go as smoothly as possible.