Gazumping

If you make an offer on a house, it is accepted but then you find yourself losing out to a higher offer, then you have just been gazumped! It is not illegal but, if it ever happens, you will wish it were. The problem comes about during the conveyancing process after an offer has been accepted (which is not legally binding) but the exchange of contracts has still to be completed. Importantly, this is after a substantial amount of money has been paid out to conduct the survey(s), the various searches, solicitors fees and other administration charges and, if this is lost due to gazumping, then it will have to be paid again next time. In light of this, it may seem incredible that an agent is in fact legally bound to tell their client of any higher offers, even after one has been accepted. You can minimise the chances of being gazumped by sticking to the following guidelines:

• Be efficient and well organised - The speed of the sale will minimise the window of opportunity during which higher offers could be made.
• Demand that the property is taken off the market - All adverts must be removed from any estate agents' windows and the 'For Sale' signs should be taken down from the property itself.
• Speak to the agent concerned - Some agents have a policy against gazumping, try to choose one that sticks to this.
• Draw up a 'pre-contract deposit agreement' - You can have your solicitor draw up one of these, which binds both seller and buyer to pay a deposit each of 1.5% the total house price. If either party then pulls out of the process, the injured party gets to keep both deposits.
• Take out insurance - This is available to compensate for such an eventuality; an extra cost worth considering.

Useful Links

With such a complex and strict process governing the purchase and sale of property, it is essential that you only deal with registered professionals at all times. Below is a list of governing bodies for each of the specialists you will encounter during the house buying process.

The Royal Institution of Chartered Surveyors The Law Society of England and Wales The Law Society of Scotland The Council for Licensed Conveyancers The National House-Building Council The Association of British Insurers The Council of Mortgage Lenders The Leasehold Advisory Service The Community Legal Service