Since 2015, data shows that the levels of gazumping around the country have been increasing steadily, along with market values and demand for property. Sitting at 36 percent so far this year, rates have almost tripled in the past two years from only 13 percent.
The term gazumping is given to the action of a property vendor securing a higher bid and taking it when they have already accepted an offer from another buyer. The original buyer is therefore removed from the sale, or gazumped.
Property guru, Peter Wetherell, points out that the act of gazumping most often occurs on properties in high demand – those of superior quality, convenient location, or unbeatable price. Qualities such as these can be found on homes at either end of the spectrum. The most exquisite property on the market, at a surprisingly affordable price for the value range, and in a highly coveted location or with a small, yet purpose-built, starter home at an extremely affordable asking price, in a family-friendly area, and built to a high standard. Each of these types of property is likely to spark some interest in potential buyers in the area, and therefore a bidding war could occur.
Despite the disappointment and setback gazumping can cause for the initial purchaser, it is an element of the property buying process in the UK, which is in accordance with the law. The only true way to avoid feeling the blow is to ensure the speed of the sale is as fast as possible, completing paperwork and applications promptly and removing any possible delays from the scenario.
London has the highest rates by more than double
Due to the political uncertainty shadowing the UK at present, the economy has caused hesitations among potential sellers over the past 24 months, and this has led to significantly reduced stock and transaction levels. This fall has seen demand for property rising and has resulted in property values following suit. It is not surprising then that gazumping trends have also grown in line with these changes and as demand has increased, as has the number of buyers being pushed out of sales because of higher bids coming along at a later date.
People looking for a new home in London face the greatest risk, with 35 percent of transactions experiencing gazumping over the past two years. This is over double that of the South East which has experienced the second highest levels in the UK since 2015 but at only 16 percent. However, this percentage is still almost double the rest of the nation, with nine percent of buyers in the North West being gazumped in the last two years, seven percent in the West Midlands, and six percent in Yorkshire and Humberside. The lowest affected area is up in Scotland, with only one percent of buyers being let down.
Property values in each of these regions are proof that the most desirable properties and elevated prices are those that experience the disappointment of gazumping the most. London is home to some of the most luxurious properties in the world and with an average value of £481,345, some of the most expensive. The South East is also reasonably lusted after, with house prices cheaper than London, but still more expensive than up north, at £315,807. The nationwide average is over half that in the capital, at only £220,084.
Although home to some extravagant countryside homes, gazumping rates are the lowest in Scotland due to it being frequently regarded as illegal. While this is not true, there are differences in the law that the property solicitors must abide by and so if a property seller accepts a bid in writing, it is legally binding. This is not to say they cannot go on to receive a higher bid before the sale is completed, but if they do choose that option, they must use a solicitor not bound by Scottish law as this would be a form of misconduct, making the procedure exceedingly rare in the most northern country of the UK.
There are things a buyer can do to reduce the chance of being gazumped
As previously mentioned, the most foolproof way to avoid the risk of losing out on a property where a bid has already been accepted is speed. A cash purchase will always complete sooner than where finance is required. However, the mortgage process can be accelerated if a mortgage in principle is approved before shopping for a new home and making an offer. The mortgage in principle puts the buyer in a position to proceed knowing they are almost guaranteed the finance required to complete the purchase – usually the only thing that can stop the final application being approved is issues with the property itself or discrepancies in the information given for the initial pre-approval.
Additional assets to be sold can also cause the entire buying process to be slowed down if the vendor is unwilling to wait and the buyer is also waiting for their buyer to sell a property. Long chains are often a problem when a quick sale is required and gives higher bidders or cash buyers the opportunity to swoop in.
A realistic proposed selling price will most certainly go a long way and reduce the risk of a higher offer kicking a customer off the ladder. Going in with a low bid leaves plenty of room for someone else if the speed element cannot be met.
Ultimately, the old saying ‘people buy into people’ should not be underestimated in the property purchasing process. If a seller receives multiple offers in the same price range, they may not always select the highest bid. If they feel one of the families that came to view their house needs it, or wants it more, and will provide it with the same love and care that they have provided for the number of years they have called it their home, they may opt to sell it to them. It is therefore essential to always be polite and build a good rapport with your potential seller.