A Complete Guide to Gazumping & Gazundering

In the UK property market, timing is key. Sometimes, even when a house deal looks done, nothing is final until contracts have been exchanged. Often, gazumping or gazundering is at play. These fairly common, but extremely frustrating tactics can leave buyers or sellers out of pocket and significantly set back in their buying or selling journey.

In this complete guide, experts at Auction House London break down exactly what gazumping and gazundering means, how they affect both sides of the transaction, and what you can do to stay protected. If you are looking to avoid the uncertainty of the open market, we also explain why auction could be a smarter, faster and more secure way to buy or sell property.

Gazumping vs Gazundering: What’s the Difference?

The difference between gazumping and gazundering comes down to whether you’re a buyer or a seller. Where gazumping adversely affects the original buyer, gazundering adversely affects the seller.

Gazumping happens when a seller agrees to a higher offer from a different buyer after having already verbally accepted an earlier one. Gazundering happens when a buyer reduces their offer before the contracts are finalised. Both are legal in England and Wales (different rules apply to Scotland), but both are widely regarded as unethical. 

What is Gazumping?

Gazumping is when a seller (especially of property) accepts a higher offer from a new buyer, after already agreeing to sell to someone else, usually before contracts are exchanged. Gazumping is legal in England and Wales but widely considered unethical, as it can leave the original buyer financially disadvantaged and without the property.

For example, a buyer might agree to purchase a house for £400,000 and begin the house buying process, only for the seller to later accept a £420,000 offer afterwards, from another buyer. The original buyer loses the property, and is likely to be out of pocket due to survey and legal costs.

Is Gazumping Illegal in the UK?

Gazumping is not illegal in England or Wales, but it is often considered unethical. Until the contracts are exchanged, either party can back out without any legal repercussions, meaning the seller has the right to accept a higher offer from another buyer if they wish to – even if they had previously agreed to sell to someone else.

In Scotland however, the rules differ: once a written offer is accepted, the agreement is binding, making gazumping much less common.

Should I Accept a Gazumping Offer?

For anyone selling their home, receiving a higher offer can feel like striking gold. There is no denying that gazumping means more potential profit for you, however, before accepting a gazumping offer on your property, it is important to consider the potential downsides too.

• The new buyer with the higher offer may not be as prepared as your original buyer which could cause complications and delays. If you are hoping for a fast house sale, this may not be the best option for you.
• While it may boost your profit in the short term, gazumping can damage your reputation with estate agents and future buyers, as gazumping is widely considered unethical.

• You do run the risk of losing the sale altogether, if the new buyer withdraws.

Do Estate Agents Allow Gazumping?

Yes, estate agents allow gazumping. Even after the seller has accepted an offer from one buyer, the estate agent is legally obliged to pass on any offer they receive, whether this is above the current offer or not. 

How to Protect Yourself from Gazumping

Despite gazumping being legal in parts of the UK, it can be extremely frustrating as a buyer. Our experts have rounded up some steps to follow, to ensure that you protect yourself from gazundering when buying property.

1. Get the property removed from the market – You are within your rights to ask the seller or estate agent to take the property off the market once your offer is accepted. This significantly reduces the chance of another buyer swooping in with a higher offer.
2. Move swiftly – Communicate with your solicitor or conveyancer to commence the legal work immediately, and get your mortgage in place as soon as possible. The quicker these tasks are done, the less time there is for gazumping to occur.
3. Consider a ‘lock-out’ agreement – A lock-out agreement, sometimes referred to as an exclusivity agreement, is a legal agreement that prevents one or both of the parties from negotiating with anyone else on certain terms. It is a legal way to buy time and gain peace of mind.
4. Keep up the communication – Remain in frequent communication with the estate agent, your solicitor and even the seller where possible. Being proactive with these sorts of things shows all parties that you are serious and deters the seller from considering other offers before you have exchanged.

At What Point Can You No Longer be Gazumped?

Once the contracts are exchanged, you are safe and protected from gazumping, as they are legally binding. Until then, either party is well within their legal rights to back out of the sale. The pre-exchange period in house buying and selling is the period of the timeline where both parties are most vulnerable, and therefore anything you can do to speed up the process will help protect you.

If you have a property you are looking to sell quickly, you could consider selling via an auction. No matter whether you have inherited a property, you are splitting your house in a divorce or you simply want to speed up the process of selling – get a free valuation on your home today. If you accept our offer, we can set a completion date that suits your needs.

What is Gazundering?

Gazundering happens when a buyer reduces their initial offer just before the exchange of contracts.

For example, a buyer could agree to purchase a flat for £340,000, but despite already being in the buying process, later lower their offer to £330,000 just before exchanging contracts. Whilst gaundering is legal in England, it is considered unethical as it then leaves the seller forced into deciding whether to accept the lower offer or risk losing the sale.

Buyers sometimes do this to exploit the seller’s vulnerable position, particularly if they are in a chain and keen to sell quickly. However, there are other reasons why buyers would gazunder.

Common reasons for gazundering include:

• Saving money – Although it is unfair on the seller, sometimes buyers do gazunder as a tactic to potentially secure themselves a cheaper house price.
• Survey surprises – If a survey reveals costly issues that could run into serious expenses, buyers often rethink what they’re willing to pay. Things like this could include the presence of Japanese knotweed or damp issues. This is a common trigger for last-minute offer reductions.
• Budget misjudgements – Buyers may overestimate their financial limits early on in the process, only to realise later they cannot stretch as far as they initially thought. This could lead them to drop their offer, rather than pull out all together.
• Buyer doubts – Even after agreeing a price, some buyers keep their options open, as they could be wary of gazumping. If they find a property they prefer, or see better value elsewhere, they could lower their original offer.
• Market shifts – The property market can be unpredictable. If prices dip or interest rates rise between offer and exchange, buyers might try to renegotiate to reflect the new market conditions.
• Legal hurdles – Issues uncovered during legal searches, including properties with lis pendens, can cause buyers to question the value of the property and seek a price reduction.

How Sellers Can Avoid Being Gazundered

Gazundering is frustrating and can be very stressful for sellers, as they are forced into either putting their property back on the market or accepting the lower offer. To avoid being gazundered when selling property, follow our expert steps to reduce your risk.

1. Prioritize serious buyers – Where possible, work with estate agents to only opt to entertain buyers with proof of mortgage approval, or people who have a desire to live in the area rather than getting a quick bargain to ‘flip’, to reduce last-minute offer reductions.
2. Be proactive in communications – Stay in regular contact with the buyer and their solicitor to catch any of their concerns early.
3. Keep backup interest alive – Where possible, continue engaging with other potential buyers or maintain a waiting list. If selling through an estate agent, request that your property remains on their website and in their promotional activity until contracts are signed. This gives you more negotiating power if your buyer does gazunder you at the last minute.
4. Prepare to negotiate – If you were to be gazundered, be prepared with your decision on whether accepting a slightly lower offer is better than risking the sale falling through. It may be the case that you could meet in the middle so that you do not lose out as much if you are to be gazundered.

If you are looking to sell your property and are not in a position to wait for a future house auction, you may wish to consider a cash offer. Cash offers allow sellers a faster and simpler way to sell. Alternatively, if you are wishing to buy at auction, you can view our current lots here.