Being "gazumped" means placing an offer in on a property which is accepted orally or in writing, either directly by a seller or via a seller's agent, only for a buyer to later withdraw that acceptance in favour of another (usually higher) offer.
This can be a highly unpleasant experience, particularly if weeks and months have been spent by a purchaser home hunting to find the ideal property, funds have been earmarked and lawyers have been instructed.
However, the practice, while considered unethical, is all too common, simply because it is not illegal.
We recently suffered a "gazumping" ourselves, and it left us feeling really disappointed. What made it more disappointing is that the agents appointed by the seller conveyed to us that the seller had not in fact accepted a higher offer made after their acceptance of ours, but (bizarrely) had decided to honour a previous offer made before ours. In other words, the seller did not want the stigma attached to them of having engaged in the practice of gazumping and instead wanted to appear as if they had been gripped by their moral conscience! The agent, unfortunately, failed to recall that they had notified us that we were the first to view and make an offer on the property when it first came to market.
In other areas of contract, an offer made orally or in writing which is accepted creates a binding contract which can be enforced. But not so in property law.
And one of the financial risks to look out for is that if lawyers are instructed by a proposed buyer (ie the lawyers' engagement terms are signed) off the back of an offer a purchaser makes which is accepted, then the purchaser runs the risk of having to pay aborted legal transaction fees if the seller subsequently withdraws their acceptance, something a buyer has zero control over. This can be up to 50% of total legal fees quoted by lawyers for the transaction in some cases, and while it is possible to contract with lawyers against this risk, we are not sure many lawyers would agree to such a fee carve out!
It seems to us that the practice of "gazumping" is not only obviously unethical, but goes directly against the grain of the rest of the law of contract. It also creates such unjustified financial risk for buyers.
Therefore it is high time the practice's legitimacy was called into question, particularly in an economic climate where residential home buyers are having to compete with large investment funds for properties coming to market and deserve certainty in their dealings with sellers as consumers.
We welcome our readers thoughts, experiences and opinions, as always 😊 👍💖