‘Gazumping’ may sound like a word from a Roald Dahl story.
But it is a common technical term in the property market.
So, what does it mean? Ands what are its advantages and disadvantages?
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.
The new buyer has therefore ‘gazumped’ the first potential buyer with their last-minute higher offer.
The word itself comes from the Yiddish word ‘gazump’, which translates to ‘to steal’ or ‘to cheat’.
However, in English, it does not have the same level of negative connotation (especially for sellers).
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.
More money
The main reason for a seller to accept a Gazumping offer is that it may result in them getting more money for their property.
Indication of interest
Secondly, a Gazumping offer can sometimes indicate that the individual is more keen on 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 good – but this isn’t always the case.
There can, in fact, be drawbacks to a gazumping offer for a seller…
Slows down completion schedule
Most sellers want to know how they can sell a house quickly. Accepting gazumping offers is generally not involved…
Gazumping requires new checks to be completed on the potential buyer – and there may be other hitches further down the line.
This can have a significant impact on the time it takes to exchange contracts.
Gazundering…
Gazundering is when a buyer reduces their offer at the last moment.
It is not uncommon for someone who gazumps to also gazunder…
After all, someone who gazumps has already shown that they are not worried about upsetting others.
Therefore, the idea of gazundering may already be on their mind.
Thus, even though you have accepted a higher offer, you may end up no better than you started.
Costs
If a seller’s conveyancer charges by the hour, receiving a new deal will involve more work, and their conveyancing fees will increase accordingly.
This cost increase 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?
Many factors influence whether or not you should accept a gazumping offer, and we have listed these below.
These factors can be broadly categorised into practical and personal reasons. However, there is an overlap between them.
TBefore deciding whether to accept a gazumping offer, you should weigh its potential advantages and disadvantages.
Advantages of accepting a gazumping offer
Higher selling price
First, accepting a gazumping offer may result in you getting more money for your house.
This is particularly useful if, for example, you hadn’t previously managed to increase your property’s value.
If money is tight, it may be worth speaking with the gazumping individual to determine whether you think they can be trusted.
Indicates high interest
Secondly, a gazumping offer can sometimes indicate that the individual is more keen on 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 a bit more.
Disadvantages of accepting a gazumping offer
Slowing down sale
First, accepting one will typically slow down the completion schedule.
This is because new checks will need to be completed on the potential buyer, which could cause other hitches further down the line.
Risk of gazundering
Accepting a gazumping offer carries other significant risks.
For example, it is common for someone who gazumps to gazunder – reduce their price at the final moments.
After all, someone who gazumps has already shown that they are not worried about upsetting others…
Compromising on morals
Some house sellers decide not to accept a gazumping offer for ethical or religious principles, including:
- The golden rule (treating others as one would want to be treated oneself)
- Karma (a belief that good and bad actions return to affect oneself).
Or, it may just be the seller’s personal standards or personality type that means they do not want to disappoint the original potential buyer.
Additional costs
There may be additional costs involved with accepting a gazumping offer, too.
If your conveyancer charges by the hour, accepting a new deal will involve more work for them, increasing your legal fees.
This cost increase may be negligible compared with the improved offer your new buyer is proposing, but it is still worth keeping in mind.
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