#london2la

Many of you will be asking yourself..... What is Gazumping? This is a strange word and used to describe a very specific practice in the UK Real Estate industry.

           This ‘frowned upon’ exercise arises from how the offer process is conducted. If you are unsure of the differences in offering in California and the U.K., I have written an earlier post entitled – ‘Offers’ that explains. 

As an offer is not legally binding when submitted in the U.K., there are far more deals that do not get to exchange of Funds and Keys. In fact due to this and other reasons the ‘fall- through rate’ in London for example, is around 1/3rd of all residential deals.

Gazumping is when a Seller has accepted an offer for a property, begins the conveyancing process which incurs costs to both sides such as – appointing a Property Lawyer, booking inspections, paying a mortgage arrangement fee. 

Once this process is under way it is an assumption on both sides that they have mad a commitment to each other and that they have made an agreement on price and timeframes for the sale that they will both try and honor to the best of their ability.

Of course this is not always the case…… what happens is a new offer is submitted from a buyer that either saw the property before it went ‘under offer’ or the seller has continued to show the property to new buyers, despite having agreed an offer. 

When this happens, it is the agent’s duty to inform the seller of the new offer. If this offer is higher in price or has better terms than the currently agreed offer the seller has no recourse in switching to these, more favorable, terms. Of course many sellers appreciate that they have already agreed to sell their property and will not consider switching out of principal.

Obviously, many people feel no allegiance to a specific buyer and money talks. This leads to a common sight in the U.K property market where a buyer, who thought they had found their next home, spends 2-3 months attempting to buy it, while incurring costs, and can wake up the next morning to be told they are no longer buying the home and have lost money.

The frequency of this happening often depends on the state of the market. If prices are decreasing, this is very unlikely to happen as buyers will not offer more than a previous buyers agreed price. In a strong market Gazumping can be rife!! For example in 2013 prices rose an average of 25% across London in the year. This meant that any property put ‘under offer’ in February would be worth nearly 10% more by the time the conveyancing process is finishing, many sellers in this market saw their neighbors listing an identical property (common in Victorian London) for much more money then they were about to receive.

Of course this can lead to Gazumping, secretly showing the property, or possibly even requesting more money the day before they sell the home. All nightmares for any buyer, especially 3 months into a transaction! I also believe that this is one of the main contributing factors to the common saying in the U.K. – ‘The two most stressful events in life, are getting divorced and buying a home’.

I hope this explanation has helped you understand the meaning of the term Gazumping. If you have any questions don’t hesitate to contact us at –

[email protected]