‘Gazumping’ is a common technical term in the property market which you may not have heard before. While the term is usually used in relation to homebuyers, it is a topic worth considering for property sellers, too.
So, what is Gazumping? And should you accept a Gazumping offer as a seller?
Read on for an answer to these questions, and more.
What is Gazumping?
Gazumping is when a property seller accepts a verbal offer from one potential buyer, but then accepts a higher offer from someone else. While it is technically the new buyer who has ‘Gazumped’ in this instance, house sellers are often unsure whether to accept a gazumping offer – in other words, a last minute higher offer.
The advantages of accepting a Gazumping offer
While some people in the property industry look down upon Gazumping offers, there are some advantages to them.
First of all, accepting a Gazumping offer may result in you getting more money for your house, if the new individual doesn’t drop out or reduce their offer at the last minute. If money is tight, and every penny counts, then it may be worth speaking with the Gazumping individual, to determine whether you think they can be trusted.
Secondly, a Gazumping offer can sometimes be an indication that the individual is more keen for the house than their rival. If both have the same funds, but one is offering more money… then perhaps it makes sense to sell to the person who wants it just that little bit more.
Is a Gazumping offer always a good thing for sellers?
Many house sellers view a Gazumping offer as a good thing – but this isn’t always the case.
There can be many drawbacks to a Gazumping offer for a seller. First of all, accepting a Gazumping offer will typically slow down your completion schedule. This is because new checks will need to be completed on the potential buyer – and there may be other hitches further down the line.
There are other significant risks with accepting a Gazumping offer. For example, it is not uncommon for someone who Gazumps to then suddenly reduce their price at the final moments. Someone who Gazumps has already shown that they are not worried about upsetting others – and therefore, the idea of Gazundering (reducing their price) at the last minute may already be on their mind. Therefore, even though you have accepted a higher offer, you may end up no better than you started with.
Furthermore, putting a Gazumping offer on a house indicates that the potential buyer lacks integrity. Therefore, not only might they reduce their offer down the line, but they may also pull out of the sale altogether. This is another disastrous circumstance which is far more likely to happen with a Gazumping offer, compared with your original buyer.
Some house sellers decide not to accept a Gazumping offer for moral reasons. Those who believe in ‘karma’ think that it is bad idea to accept the Gazumping offer, and therefore ruin your original buyer’s hopes of moving into your property. For those who believe that ‘What goes around, comes around’ – or even those who like to hold themselves to a certain moral code – accepting a Gazumping offer is often a no-go.
There may be additional costs involved with accepting a Gazumping offer, too. If your conveyancer charges by the hour, then accepting a new deal will involve more work for them, and will therefore increase your legal fees. This increase in costs may be negligible compared with the improved offer your new buyer is proposing, but it is still worth keeping in mind.
Should I Accept a Gazumping Offer?
There are many factors which go into whether or not you should accept a Gazumping offer. These factors include:
- Morals
- Reliability
- Costs
- Speed
It may breach your moral or ethical code to accept a Gazumping offer – in which case, you shouldn’t do it. However, if times are tight, and you are keen to get as much money for your house as possible, then perhaps it is worth the risk. You should just be wary that someone who Gazumps may reduce their offer at the last minute – or even pull out altogether. The likelihood of these things taking place can only be realistically judged by you, through engaging with the individuals.
Accepting a Gazumping offer will also typically delay the completion date of your deal. If you are keen to get the house sold quickly, then it is often better to stick with your initial offer.
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