There has been an increase in gazumping across the UK over the past 24 months, a new study finds. As house prices continue to rise to meet high levels of demand and low levels of stock on the market, gazumping rates have risen from 13 percent in 2015 to 36 percent now.
Gazumping is when a property seller accepts an offer from a buyer and then accepts an even higher offer, removing (or gazumping) the original buyer from the purchase.
Peter Wetherell, CEO of luxury real estate agent Wetherell, says that gazumping generally happens on highly desirable properties whether it be because of a highly sought after location, ideal price range, or exceptional quality of features and design. The act of gazumping could happen on properties at either end of the spectrum, either on the perfect family starter home or the most extravagant of properties, either is likely to start bidding wars, and higher bidders could come along and gazump buyers at any moment.
As frustrating as it is, gazumping is still legal in the UK, and the best way to avoid being stung is to act quickly as a buyer, ensuring all paperwork is completed promptly.
Due to the increasing uncertainty around Brexit, real estate across the UK has been scarce in stock with buyers holding off on entering their home onto the market. Demand is high, however, and this has pushed house prices up.
The frequency of gazumping was unsurprisingly found to be highest in London, with 35 percent of buyers being gazumped since 2015. The second area was the South East, with 16 percent of buyers feeling the sting, yet at less than half of the rate in London. It comes as no shock that these two areas are the most expensive in the UK, with average house prices of £481,345 in London and £315,807 in the South East – significantly higher than the £220,084 average across Britain.
Next up was the North West at nine percent, followed by the West Midlands at seven percent, and Yorkshire and Humberside at six percent.
At the bottom of the frequency list is Scotland, at one percent. Gazumping is rare in Scotland due to Scottish law and legal practice. It is commonly thought to be illegal. However, the rarity is due to written offers being legally binding in Scotland and should a buyer wish to accept a higher offer after this, a solicitor bound by Scottish laws would be committing misconduct if they accepted the case. However, a solicitor not bound by Scottish laws can still represent sellers in Scotland and so gazumping still happens at a very low frequency.
The majority of gazumping cases are found in regions with inflated market values and increasing demand where purchases are willing to enter bidding wars to secure a property.
There are some things that a property buyer can do to reduce the risk of being gazumped, and it mostly comes down to the speed of a sale. A cash buyer can obviously close a sale faster than a buyer requiring a mortgage. If a mortgage is needed, it is best to get a mortgage in principle before doing anything else – this puts a buyer in a position to make an offer right away. A realistic offer is a sure way to feel secure in the purchase and reduce your risk of being gazumped.
Following the acceptance of an offer, the mortgage application should be completed as soon as possible as the risk of gazumping is present during this entire time.
If the buyer has a property to sell, most sellers won’t wait for this to complete as there can be a long chain of waiting which can delay the seller buying a new property themselves. It is always worth taking this into consideration when selling a property.
Lastly, building rapport with the seller can eliminate risks of being gazumped. As just another person, there’s a strong chance they feel quite attached to the property and want it to go to a good home where it will be well looked after and utilised. Sharing your situation and discussing your plans for the property could secure the property for you in a way more money could not.
