When you're in the process of buying a new home, there can be nothing more frustrating than being outbid at the last minute. So is there a way to avoid being gazumped by a rival buyer?
Gazumping more likely when prices rise
Gazumping involves a potential home buyer being outbid at the last minute by a rival purchaser. Or simply a buyer changing their minds at the last moment, leaving your house unsold and back on the market.
It is more likely to occur when a seller thinks the value of their home has increased significantly over the course of the transaction, which can often take several weeks.
In England and Wales, there is nothing in the law to stop a seller pulling out of a transaction late in the day if they think they can get a better price from someone else.
Different system in Scotland
Transactions are run differently in Scotland: contracts tend to be exchanged much earlier than in the rest of the UK, which means there is less time for sellers to be tempted by other offers.
On top of that, solicitors in Scotland are effectively banned by the Law Society of Scotland from continuing to act for a client who changes their mind after accepting an offer on their home.
South-east is gazumping hotspot
Research from online estate agent eMoov has found that Sheffield is the UK hotspot for gazumping.
In the city, more than a third (29%) of all property owners say they have fallen victim to gazumping in the past.
Meanwhile in London, 17% of people say they have had a property snatched away from them in this manner.
Outside of the South-east, the rates are lower: in Manchester, 15% of those questioned had been gazumped, while in Nottingham and Bristol the rate was 12%.
The rate was lowest in Southampton where just 2% of people said they had experience of being gazumped.
Why is gazumping so bad?
The biggest issue with being gazumped is losing a property you had your heart set on – although the seller may give you the chance to increase your offer to match the new rival bid.
But there are other financial implications too: chances are, you have already spent several hundred pounds on a survey, as well as legal and mortgage fees.
If you've been gazumped, there's no way of getting this cash back.
Russell Quirk, CEO at eMoov, says: "It is one of those things in the current structure of property purchasing unfortunately: buyers that have displayed honest interest in a property only to be let down by owners with pound signs in their eyes."
What can you do to avoid being gazumped?
There is only one failsafe way to ensure you aren’t outbid on a property, says Guy Meacock of buying agency Prime Purchase.
"This involves a lock-out agreement, which involves a binding contract signed by both sides," he says.
"The buyer may also have to put down a non-refundable deposit: the seller is not allowed to agree terms with another party, while the buyer has to agree to exchange in a certain timeframe."
Meacock adds: "However, the reality is that until contracts are exchanged, you leave yourself open to being gazumped so you need to move as quickly as possible to reduce the chances of this happening."
You can speed up the transaction by ensuring you have mortgage finance in place before you make an offer and by having your survey carried out at the earliest opportunity.
*Stats last updated August 2015.