Before we explain what gazumping is, we are reminded of an advertising campaign back in the late 1980’s for a national estate agency featuring a hot air balloon which had “GZUMP” as its serial number! We have no idea if this was deliberate or just an unhappy marketing executive but it did make gazumping a hot topic during the manic property markets towards the end of the last century.
So what is gazumping? Dictionary.com define it as being, “...to cheat (a house buyer) by raising the price, at the time a contract is to be signed, over the amount originally agreed upon…” There is a secondary meaning of “...to swindle…”. Either way, you get the idea that it is not something particularly good.
Gazumph is a Yiddish word that seems to date back to the 1920’s and originally meant to overcharge which would account for why it has been associated with the increase of a sale price. Its increase in use is certainly prevalent from the 1960’s onwards and today is unfortunately synonymous with estate agents.
When the seller accepts an offer on their property, the buyer will usually not yet have commissioned a building survey or solicitor. The offer is made "subject to contract" and until written contracts are exchanged either party can pull out at any time. It may take two or three months for all the necessary formalities to be completed, so if the seller is tempted by a higher offer during this period it leaves the buyer disappointed and potentially out-of-pocket. Asking price has no impact on whether a property has been "gazumped". It is the act of accepting an offer over a previous offer that is subsequently known as gazumping.
When property prices are falling the practice of gazumping is rare. The term “gazundering” has been coined for the opposite practice whereby the buyer waits until everybody is poised to exchange contracts before lowering the offer on the property, threatening the collapse of a whole chain of house sales waiting for the deal to go through. “Gazanging” describes a similar situation, where a seller pulls out of a sale entirely, expecting to get a better asking price or offer once the market improves.
Whilst gazumping in England and Wales does happen, Scottish law makes the problem of gazumping a rarity in Scotland. The Scot’s system of conveyancing, the buyer either has to obtain a survey prior to making a bid to the seller's solicitor or make an offer "subject to survey". Sellers normally set a closing date for written offers, then provide written acceptance of the chosen bid. The agreement becomes binding when a seller's solicitor delivers a signed written acceptance of a buyer's offer.
Here at Waymark, we obviously dislike the act, or indeed the threat of gazumping and its various alternatives and unless there has been a structural or legal issue that fundamentally changes what is being bought or sold, the price agreed should be the price that contracts exchange at.