Insurance can help cushion the financial blow
Recent research reveals a worrying trend in the housing market: 37% of buyers are now being gazumped, a rise of 6% over the past two years. While homebuyers cannot completely prevent this from happening, there are measures you can take to mitigate its impact and put yourself in a stronger position.
One effective solution is to take out Home Buyers Protection Insurance to cushion the financial blow. The risks associated with gazumping can be significant. The findings reveal that 78% of homebuyers want gazumping made illegal, and 59% of those who were gazumped suffered financial losses. On average, a failed property purchase costs £2,400.
Financial protection
Home Buyers Protection Insurance, which is relatively inexpensive, allows you to recover some of your costs if you are gazumped. In the 2023/24 period, claimants received an average payout of £975. This insurance can provide vital financial protection against the unpredictable nature of the housing market.
Emotional and Financial Investment
Nearly eight in ten homebuyers (78%) wish gazumping were outlawed. This practice allows sellers to accept a higher offer from another party after accepting a buyer’s offer. The current home buying and selling system is flawed, as the purchase is not legally binding until the exchange of contracts, long after the buyer has invested significantly financially and emotionally. Buyers face expenses such as mortgage and conveyancing fees, property surveys, and local searches, which can amount to hundreds or thousands of pounds.
Be prepared and move quickly
To mitigate the impact of gazumping, it’s crucial to be prepared and move quickly. Ensure you have your mortgage agreement in principle, solicitor lined up, and all necessary documentation ready. Any unnecessary delays increase the risk of another buyer making a better offer. Swift action can help you reach the point of exchanging contracts, making the transaction legally binding.
Take proactive steps
Ask the seller to take the property off the market once your offer is accepted. Sellers may be hesitant, but it’s worth requesting as it reduces the chance of a higher offer emerging. Additionally, consider negotiating a “lockout” agreement. This contract gives the buyer the exclusive right to purchase the property within a specified period.
Need guidance on protecting yourself from gazumping?
If you require further information or guidance on protecting yourself from gazumping, please do not hesitate to contact us. Our team of experts is here to assist you in making informed decisions. To speak to our highly experienced mortgage team, contact us here.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
