Gazumping is when a seller verbally accepts a price from you, but then signs a contract with another person to sell the property for a higher price.
Gazumping is not illegal as the seller did not sign a contract with you.
If you are gazumped
There is little you can do if you are gazumped.
Real estate agents have to pass on all offers to the seller. Their duty is to the seller not the buyer.
You will still have to pay costs for services you may have already done to buy the property.
These could include any of the following:
- legal advice
- conveyancing services
- inspection reports
- finance application costs.
If you paid a deposit, it must be refunded in full.
Protect yourself from gazumping
You can be gazumped up until the time the contracts are signed and exchanged.
Paying a deposit does not secure the sale.
To avoid being gazumped you should do all of the following:
- be careful your offer is not too low to avoid the risk of another keen buyer making a higher offer and entering into a contract quickly
- be aware an accepted offer does not mean that the property is sold to you
- have your loan finance pre-arranged and ensure you can pay the deposit
- seek to exchange contracts as soon as possible. The exchange of the contract will take the property off the market
- ensure your obligations can be met within the cooling-off period after the exchange of contracts
- be aware the seller is not generally compelled to sell to any specific person and can change their mind at any time prior to the exchange of contracts.
Last updated: 23 March 2016