As a homebuyer, you might think that it’s time to start celebrating and buying furniture once the seller has accepted your offer. Beware however that you’re not quite there yet. Buying a house could turn out to be a long and arduous process due to the many things that could go wrong — for instance, you cold experience gazumping, which is undoubtedly one of the most heartbreaking things that could happen to any homebuyer.
What Exactly is Gazumping?
Gazumping occurs when another buyer offers the seller, on the home you’ve already made an offer on, a higher offer and the seller accepts that offer. This could occur any time before contracts being exchanged, and in most instances due to the seller wanting to maximise whatever profit they can get for selling the property. When this happens, you’d essentially be pushed aside and out of the running to buy the house. What’s more, you won’t be able to get back the funds you used for services related to the home buying process, including legal fees, inspections, conveyancing, etc., save for your expression of interest deposit or payment, if applicable, notes one of the top property solicitors in Townsville. Unfortunately, gazumping is 100% legal.
Why is Gazumping Even Legal?
Although the seller might have accepted your offer, your agreement doesn’t become legally binding until you’ve exchanged contracts. Because the exchange of contracts usually comes at a latter part in the home buying process—after you’ve already shelled out money for a conveyancer, solicitor, mortgage, inspections, etc.—you might find that you’ve wasted all that money for nothing if you do get gazumped. So keep in mind that a verbal arrangement with the seller doesn’t have any legal weight until you and the seller formally sign the contracts.
How Do I Avoid Getting Gazumped?
Fortunately, there are some steps you could take to safeguard yourself and avoid being gazumped. These include the following:
- Try to get the seller to exchange contracts with you as early on in the game possible. This way, you secure the sale because the seller would have to take the home off the market.
- Request that the real estate agent give you a written agreement stating that you would be notified if another buyer makes another offer on the house and that you could make your counteroffer.
- Request that the house be taken off the market after the seller accepts your offer. Do note though that you might need to have your solicitor write an exclusivity agreement or pay a fee for the request.
- Get your finances in order. If you’re taking out a mortgage to fund your home purchase, get preapproved first so you could inform the seller that you have the necessary funds for the transaction.
Yes, gazumping might be hard to prevent since verbal offers and agreements are not legally binding, so the seller has all the right to consider other buyers until the exchange and signing of contracts. But you could take the steps above to avoid being gazumped and save yourself a lot of stress and heartache.