:When you’re buying a property in the UK, you may fear being gazumped and losing out on your dream home. To help avoid this scenario, there are several key steps you can take
Gazumping is a term used in the UK to describe when a seller accepts a higher bidder, resulting in the rejection of an earlier offer. This practice can be very upsetting for buyers and typically seen as unfair, meaning it is essential for buyers to take out an insurance policy with their solicitor to protect them from being disadvantaged if another buyer places a higher bid. The policy also helps cover any legal costs arising from gazumping and gives buyers peace of mind that their deposit and other costs regarding their purchase are secure should any issues arise with their offer. By taking these steps before placing offers on properties, buyers can better protect themselves against being gazumped.
Firstly, get insured. It’s wise to have buildings insurance in place and consider taking out mortgage payment protection insurance too. That way, if your sale falls through due to a higher offer from another buyer, you will at least be financially covered for any costs incurred throughout the process.
Secondly, you should try to get an agreement in principle (AIP) with a lender before making an offer on a property. This is essentially a promise that they will lend you the money for the purchase. Having this in place shows the seller that you’re serious about buying, which could help to deter any other buyers from upping their offer later on.
Thirdly, it’s important to move as quickly as possible throughout the process. This means choosing a solicitor and surveyor promptly, obtaining all relevant documents from the seller and generally staying on top of things. Knowing what is expected at each stage can also be useful in avoiding delays.
Finally, consider a “lock out agreement” with your seller. This is where the seller agrees to not enter into negotiations with anyone else until a certain point in time passes or a particular condition is met - e.g., when there is an exchange of contracts. This can be a great way to protect yourself against gazumping and ensure that the property is yours.