Gazumping happens when a seller who has already accepted one buyer's offer then goes on to accept a higher offer, pushing the first buyer out of the picture.
It can come about at any point before contracts are exchanged, as until the papers are signed there is no legal obligation to either buy or sell.
The first buyer stands to lose out on the property of his or her dreams, but that's not the only problem. They can also lose money. If surveys, searches and fees have already been incurred, they cannot then be recouped.
The seller's estate agent is legally obliged to inform them of any offers made on their property, and it is up to the seller whether or not they consider them.
If the seller wants the property to be removed from the estate agent's register, he or she must make the request in writing, and some sellers prefer not to do so until the contracts are signed.
Exclusivity agreements can help to avoid gazumping. These involve the seller signing an agreement that states that during a specified exclusivity period, he or she will not enter into any agreement with anyone else.
Some insurance companies offer gazumping insurance policies to cover fees you might have incurred.
Unless you're lucky enough to live in Scotland where there are laws to protect the buyer. Under the Estate Agency Act, estate agents are obliged to pass on all offers they receive, although a determined buyer will probably go straight to the vendor.
There's little you can do to repel a determined bidder, but there are ways to lessen the chance of it happening, or at least reduce the impact if it does:
• Offer the full asking price and request the property be removed from the market.
• Be flexible with the vendor and don't quibble over minor points.
• Make it clear you're willing to complete on their timescale, not yours.
• Be nice to the vendor - if you've established some kind of relationship with them, it should be harder for them to let you down.
• Take out insurance - you must do this before you instruct your solicitor, but then if you're gazumped, you can be refunded the cost of your various fees.
Gazundering is a phenomenon more common to a buyers market.
This is where the buyer gets to be mean to the seller by waiting until everybody is poised to exchange contracts and then lowering his or her offer on the property.
If the seller refuses, the whole chain might collapse.
Click to receive a free quote