How To Avoid being Gazumped
You’ve made an offer on a property. You might have had to negotiate a bit, but that’s OK because this is your perfect home and you can’t wait to move in. You then get a rather awkward call from the estate agent to say that unfortunately the seller, (whom you took to be a gentleman) has received a higher offer from another buyer.
It appears your choices are limited, as the vendor seems to have you over a barrel. Either you match or exceed the other buyer’s offer, or you withdraw from the purchase – either way you lose. Even if you do offer more the other buyer could still come back and even exceed that, starting a bidding war with only one eventual winner, who might subsequently regret going so high.
Good agents do not encourage gazumping, but are obliged by law to submit all offers in writing to the vendor, and it is the vendor who decides how to proceed.
There's little you can do to repel a determined bidder, but there are ways to reduce the chances of it happening to you.
Firstly, you could offer the full asking price, subject to the property being formally withdrawn from the market. You could go further than this and purchase a formal first right of refusal from the vendor which would include the vendor instructing the agent in writing not to submit any further offers, which overcomes their legal obligation to do so otherwise. Although you might have preferred to pay a little less than the asking price, you could regard the extra as a form of insurance against having to pay more following a gazumping situation, which is not uncommon in a sellers’ market.
Only offer to buy when you are in the strongest buying position. Keep in touch with your solicitor, have your mortgage arranged and rather rent for a while than allow a linked sale to disempower you. Please feel free to call us for any advice you might need - we’d be happy to help.