Having an offer accepted and then later refused is one of the most frustrating things that can happen to you when buying a house.
But there are ways to reduce the risk of this happening; and this guide will show you how. After reading you'll know how a sealed bid can improve your chances of having your offer accepted.
What is gazumping?
Gazumping is when a seller goes back on an offer they had previously accepted, in favour of a higher, more recent offer.
Because estate agents are obliged by law to tell sellers about all offers made on their property, gazumping is a risk right up until contracts are exchanged.
It is deeply frustrating for buyers, especially if other costs have been paid and the wheels are in motion, but sadly there is no law against it.
Gazumping: what can be done?
If you are gazumped there are a few things to consider:
Firstly, if you are chain-free or in a position to buy outright, the opportunity this offers for a quick transaction may be convenient enough to sway the seller into accepting your slightly lower offer.
You might also consider offering more money if you are particularly attached to the property. It is possible that your higher offer will be successful, although be careful not to let emotion dictate your decision here. You don’t want to offer too much money and find yourself in tighter financial straits later on.
Another option is a sealed bid. This method is often used by sellers to decide who to sell to, especially if multiple buyers are interested.
In this situation, buyers are given the opportunity to formally submit an offer in writing to the estate agent within an agreed timeframe. The estate agent presents these to the seller, who then looks over them and decides which best fits their needs.
How does the seller decide which bid to accept?
Often the highest bid will be chosen, as the seller is ultimately looking to make the most money. This isn’t always the case, though. Sometimes they will be attracted by a combination of money and convenience, and the chance of a quick sale might help them knock a few thousand pounds off of the price.
You can also use your sealed bid letter to show the seller what makes you more favourable than other buyers. Mention things like whether you are chain-free, which we covered before, or if you are in a position to move very quickly, or even mention the emotional side of things and explain why the house is such a good fit for you.
You can also propose an exclusivity agreement. This is where you pay a fee to the seller for exclusive negotiating access for an agreed period of time.
An exclusivity agreement improves the chances of an offer being accepted, but again, there is no legal obligation for the seller to honour what was discussed during this period.
Gazumping will always be a risk, but taking precautions and being aware of other options can help reduce the likelihood.