What is gazumping? Gazumping is the term used to describe a situation where Buyer A places an offer that is accepted only to later discover that Buyer B has placed a higher offer that has been accepted by the vendor.
Is gazumping illegal? No, not in NSW
Why does this cause frustration? The frustration is almost always on the buyer’s side. Often the buyer that has been gazumped will have spent money on pest and building reports that they cannot get back later. There is the obvious emotional heartache thinking that they have found their ideal property later to find out it is no longer available.
What steps can be taken to avoid being gazumped? The only way to avoid being gazumped is by having a legally binding contract. This involves both parties signing their respective contracts, a 10% deposit being paid and the contracts being dated and ‘exchanged’.
An agent can remove the issue of gazumping by exchanging the contracts ‘in house’ which speeds up the process. In this situation, the buyer will need to pay a non-refundable 0.25% deposit (of the purchase price). They also get the benefit of a five day cooling-off period which they can pull out of the contract, however, the vendor is locked in during this time. There are a few other rules and scenarios involved here, which I am happy to explain in more detail if you need specific advice.