A staggering 37% of buyers are being gazumped. What is more shocking, is that the figure has grown by 6% in the last two years. The HomeOwners Alliance as part of its campaign to reform the buying and selling process is calling for an end to the practice of gazumping and recommends that buyers take out Home Buyers Protection Insurance to mitigate the financial loss.
Recent research from MFS group highlights the risks of gazumping:
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37% of homebuyers are now being gazumped - up from just over a third two years ago
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78% of homebuyers want to see the practice made illegal
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59% of buyers who were gazumped lost money
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The average cost of a property falling through is £2,400
As a buyer, there’s not a lot you can do to avoid gazumping. We advise getting Home Buyers Protection Insurance, which is relatively inexpensive, allows you to recover some of your costs if you are gazumped and is, as we like to say, a no-brainer. In fact, for those who had to make a claim, the average amount they received was £975 in 2023/24 (the cost of the insurance starts at just £69).
Almost eight in ten homebuyers (78%) would like to see gazumping outlawed - the practice which allows sellers to accept a higher offer from another party after they have already accepted a buyer’s offer. The home buying and selling system is flawed and means the purchase is not legally binding until the exchange of contracts, long after the buyer has already invested heavily, both financially and emotionally. They’ve paid for mortgage and conveyancing fees, property surveys and local searches, and these costs can go into hundreds, or even thousands of pounds. The average cost of a property falling through is estimated to be £2,400.
Plus, there’s the emotional impact of having the sale pulled from under your feet. Not only have buyers invested financially but they’ve spent time planning their move, visualising themself in their new property only for the rug to be pulled last minute, leaving them back on the hunt for a new property.
The HomeOwners Alliance says that they consistently hear from customers who have had this happen to them, some more than once, desperate for a legal foot to stand on. But sadly the system is flawed.
Paula Higgins, CEO of HomeOwners Alliance believes that the home buying and selling system needs to change on many levels: “The system fails consumers by enabling gazumping. If you take a look at property websites you will see many properties listed as sold subject to contract (sold STC), almost inviting other potential buyers to try their luck with an offer. And estate agents are legally obliged to pass those offers on to the seller.
Unfortunately at the moment gazumping is still legal and sadly there’s not much you can do about it. That’s why we’re trying to raise awareness to consumers so they can at least protect their pockets from this unethical practice. We urge them to be prepared, move quickly, get home buyers protection insurance and where possible “lock in” the seller.”
We are urging consumers to be aware that while you cannot prevent being gazumped there are steps you can take to mitigate the impact.
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Get insured! While you cannot prevent the seller accepting another offer, you can mitigate the financial loss. Home buyers protection insurance starts at £69, has no excess to pay and can help recover your costs if your transaction does fall through including gazumping.
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Be prepared. Make sure you’re in the best position to move the sale along quickly. Have your mortgage agreement in principle in place, have your solicitor lined up along with all necessary documentation. Any unnecessary delay adds the risk that another buyer could come along and make a better offer.
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Move quickly. You want to get to the point of exchanging contracts as quickly as possible, because at that point the transaction is legally binding. So keep the pressure on, be responsive and do all you can to keep the process moving.
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Ask for the property to be taken off the market. Sellers are not always keen to do this, but it’s worth asking them to take the property off the market once your offer has been accepted. If the property is no longer being advertised, there’s much less chance of a higher offer being made and you being gazumped.
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Ask for a “lock out” agreement. A lock out agreement is essentially a contract between the seller and the buyer stating that the buyer has the exclusive right to buy the property within a certain period of time. See our guide for more information on lockout agreements.
For more information on protecting yourself from being gazumped we have more tips in our guide on gazumping and more details on home buyers protection insurance too.
