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‘Gazumping’ may sound like something big, fluffy bunny rabbits in a fairy-tale land do – perhaps a term used in the place of ‘jumping for joy’. But in reality it is a deeply unscrupulous and alarmingly common malpractice in real estate. Gazumping is shockingly common in England and Wales, and the fact that it happens is not nearly as shocking as the fact that it is legally allowed to happen. Let’s find out more about what gazumping actually is and why it continues to occur in England and Wales.
Imagine that you want to buy a house, and you conduct a thorough and painstaking search, as house buyers do, before you finally find a home that fits the bill. You negotiate with the seller or agent and agree on a price that suits both parties. So a verbal agreement is made, and you stop looking for houses, happy in the knowledge that you’ve found your ideal home within your budget. But then the seller receives another, higher offer from someone else. The seller then informs you about this, coercing you to increase your offer or lose the property.
This is gazumping – when one party in a property deal completely disregards a verbal agreement that has been made, going back on his or her word in order to force the other party to better the offer or risk losing the deal. This practice can apply to sellers as well as buyers – when it applies to buyers, it is more commonly referred to as ‘gazundering’ – and it is equally prevalent in the rental market. This means that tenants and property agents too can break existing verbal contracts in order to opt for more lucrative offers.
So gazumping essentially means to break an existing contract, usually verbal, and go for a ‘better deal’, leaving the original party in the lurch! Considering the difficult economic conditions and the difficult state the housing market has been in recently, it is no surprise that this practice is widespread in England and Wales. Although one can understand why the practice is rampant, it is not only unethical but also illegal in several countries around the world.
The way to solve the problem and prevent this morally loose practice from occurring would be to place more weight on a verbal contract and in fact make it legally binding. Other changes in the process of property transactions could also help reduce the problem of gazumping and gazundering. For instance in Scotland, especially in Edinburgh, most of the property market is handled by registered solicitors or agents, who are bound by the regulations of the Law Society of Scotland which prevent them from taking on new offers after an offer has been accepted and which require them to withdraw from representing individual sellers who may choose to do so.In the US gazumping is against the law, although different states have different regulations regarding the matter. Largely, though, the law works so that both buyers and sellers cannot back out of a property deal after a certain stage of the agreement has been reached.
Gazumping is not just an unethical practice, but one that ought to be unlawful. People who have been gazumped not only end up wasting their time, but also may also lose money they have invested in the deal by way of property conveyancing, surveys, solicitors, etc. It is very unfortunate that this practice is allowed to continue and thrive in England and Wales. It is imperative that the proper legal deterrents be put in place in order to weed out this morally suspect way of doing things.