Gazumping

Gazumping occurs when a seller accepts a higher offer from a new buyer after already accepting a previous offer, typically causing the original buyer to lose the property after having spent money on surveys and legal fees.

In England and Wales, property sales are not legally binding until exchange of contracts. This means that between offer acceptance and exchange - a period that can last several months - either party can withdraw or the seller can accept a better offer. Gazumping is entirely legal (though widely considered poor practice).

Gazumping is more common in rising markets where competition is high. It effectively means the original buyer's due diligence investment (survey fees, legal fees, mortgage costs) is wasted.

To reduce the risk of being gazumped: push for a quick exchange, offer to pay a lock-out fee (some sellers will accept a small payment in exchange for agreeing not to accept higher offers for a fixed period), ask for the property to be taken off the market once your offer is accepted, and work with a solicitor who can move quickly through the legal process.

For auction purchases, gazumping is impossible because exchange occurs at the hammer. Once you win the bid, the sale is binding.