Gazumping is when the property seller accepts your offer, then proceeds with the purchase and instructs a solicitor. You may be paying for searches, valuation and instructing a lender. Then you can be notified that the seller accepted a higher offer from a different person. Now you are left in a position where you're unsure what to do. Is there anything you can do to recover the money you spent? Is the seller bound by the verbal agreement you had, is there any way to offer a higher amount, or can you simply walk away from this transaction?

You were gazumped.

Unfortunately, unless the contracts are exchanged, the agreement between you and the seller is not legally binding. That means either party can withdraw from the agreement. It is very little you can do to protect yourself and recover the money you've spent. How can you avoid being gazumped?

• Timing is Important - the quicker you can move, the less the seller will be willing to accept a new offer. You should speak to the estate agent only to understand the expectations and timeframes of the seller.
  
  
• Building a positive relationship with the seller and the estate agent and informing them of your actions is a good start. When you place your offer, advise the estate agent of your expectations and timeframes.
  
  
• As a part of your offer, you should consider asking the seller to remove the property from the market. Some sellers and estate agents will naturally feel reluctant to do that, but you should still try.
  
  
• Consider offering on the basis that you can perform an exchange of contracts within a set amount of time. Before doing this, you should ensure you can meet the timeline you're offering.
  
  
• It would be best if you asked the seller whether they are prepared to enter a pre-contract deposit agreement. If this is agreed upon, the terms will state that both parties pay a percentage of the deposit held by a third party. The exchange of contracts must be discussed and agreed upon by a specific date. If the contracts are not exchanged by that date, or one side pulls out, the other party keeps both deposits.

What is Gazundering?

In a slower property market where more sellers are available than buyers, gazundering is common. This is the opposite of gazumping, something happening when a property seller accepts a buyer's offer. Sellers may proceed with their purchase and make plans to move house, but they may decide not to have further viewings. When the exchange of contracts is near, the buyer may significantly reduce their offer. Once that happens, the buyer is left in the lurch, as they may have been relying on the money from the sale to fund the purchase.

Remarketing means the seller could risk the related investment if they fail to find a new buyer. This results in a dilemma between accepting the lower offer and having to fund the shortfall of any purchase or refusing the offer entirely and remarketing the property instead. How to reduce the risk of gazundering? Well, there are a few ways:

• Timing is essential, so the quicker you move, the less time the buyer has to reduce any offer. You should ask the buyer if they can meet the timeframe before accepting an offer.
• Please get to know the market and the property, and ensure you have a realistic price for it, which may negate the need for buyers to reduce the offer.
  
  
• Being realistic about the defects of the property and the cost of remedying them is a good way forward.

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