What does Gazumping mean?

The term gazumping involves that the seller of a property is backing out from an agreement already settled, in order to give way to another buyer who actually offers a much higher price. It is not a nice treat a potential buyer can get, but English property law allows it, so it can be taken advantage of.

Pertaining to property law in England it is known that until the exchange of contracts happens, there is no legally binding process among the seller and the buyer, and this is why in a situation like this (when a second buyer proposes more money for the property), the seller can refuse the first proponent and accept the second’s offer.

Many times, in the case there is a real estate agent hired to act on behalf of the seller, he will closely watch every detail and every potential buyer which might offer more for the respective property. If the seller gets more for the property, the real estate agency also earns more, especially when everything is working on a commissioning basis. His advising of the owner to switch to another buyer (to proceed to gazumping), many times leads to the fact that the buyer will actually not get back the deposit he has made.

What is important to know is that between the exchange of contracts and the actual completion of the process there is a period of up to one month, which is actually a blank period when the seller may turn to another potential client, if he finds it more advantageous. Plus, the real estate market fluctuation is always an important factor which influences gazumping.