Best Buy Mortgages Glossary - Gazumping
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Gazumping
Gazumping is the term used to describe a situation in which the
seller of an asset (let's say a house) accepts an purchase
offer, having already accepted another lower offer from another
potential buyer.
In other words, the seller changes his allegiance to a second
buyer who offers more money.
A buyer with ready cash will often be in a position to gazump
somebody who has to raise capital through a mortgage. This is
because under English law, the seller is not legally committed
to go ahead with the sale until the point at which contracts are
exchanged.
Gazumping tends to become a feature of property bull markets,
where house prices are racing ahead and buyers begin to panic
that they may find their potential dream home rising in value
out of their "price range". Estate agents having put a buyer and
seller together often discover a fresh potential buyer appears
on the scene. The agent then has a judgement to make, does he
advise his client, the seller to switch allegiance to the new
purchaser.
Estate agents are frequently portrayed as bandits -sometimes
justifiably - but bear in mind sellers who may have acted
disreputably will often blame the intermediary - the 'poor old'
estate agent gets the blame!
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