Protect Yourself from Gazumping: Home Buyers Urged to Take Action

by James Powell

Protect Yourself from Gazumping: Home Buyers Urged to Take Action

Gazumping is on the rise, affecting a significant number of home buyers. Currently, a staggering 37% of buyers are being gazumped, a figure that has increased by 6% over the past two years. While it’s challenging to prevent gazumping entirely, there are steps you can take to reduce its impact and improve your position in the housing market.

Understanding Gazumping

Gazumping occurs when a seller accepts a higher offer from another party after initially agreeing to a buyer’s offer. This practice leaves the original buyer out in the cold, often after they’ve invested time and money into the process. According to recent research from Market Financial Solutions:

  • 37% of homebuyers are now being gazumped, up from just over a third two years ago.
  • 78% of homebuyers want to see the practice made illegal.
  • 59% of buyers who were gazumped lost money.
  • The average cost of a property falling through is £2,400.

Protecting Yourself Against Gazumping

While you can't completely avoid the risk of being gazumped, you can take steps to protect yourself financially and reduce the likelihood of it happening:

  1. Get Home Buyers Protection Insurance: This insurance is relatively inexpensive and can help you recover some of your costs if you are gazumped. For example, in 2023/24, the average claim amount was £975, with policies starting at just £69. It’s a small price to pay for peace of mind.
  2. Be Prepared: Ensure you’re ready to move quickly once your offer is accepted. Have your mortgage agreement in principle, solicitor, and necessary documentation ready. Any delay increases the risk of another buyer making a better offer.
  3. Move Quickly: Aim to reach the exchange of contracts as soon as possible, as this is the point where the transaction becomes legally binding. Stay responsive and keep the pressure on to avoid unnecessary delays.
  4. Ask for the Property to Be Taken Off the Market: Once your offer is accepted, request that the seller removes the property from the market. This reduces the chance of higher offers from other buyers.
  5. Consider a Lock Out Agreement: A lock out agreement gives you the exclusive right to buy the property within a specified period. This agreement can provide additional security and prevent the seller from entertaining other offers during that time.

The Emotional and Financial Toll

Being gazumped not only has financial repercussions but also takes an emotional toll. Buyers invest both financially and emotionally in the process, paying for mortgage and conveyancing fees, property surveys, and local searches, which can amount to hundreds or even thousands of pounds. The average cost of a failed property purchase is estimated at £2,400.

“The system fails consumers by enabling gazumping. If you look at property websites, you’ll see many properties listed as sold subject to contract (sold STC), almost inviting other potential buyers to make an offer. Unfortunately, estate agents are legally obliged to pass those offers on to the seller.”

Advocating for Change

There are campaigns to reform the buying and selling process to eliminate gazumping. They are urging the government to make changes that protect consumers and make the process more secure and less stressful.

In the meantime, home buyers are encouraged to take proactive steps to protect themselves. By being prepared, moving quickly, and considering protective measures like Home Buyers Protection Insurance and lock out agreements, you can mitigate the risks associated with gazumping.

Stay informed, stay prepared, and take action to protect your investment in the property market.

Adapted from Home owners Alliance

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