Gazumping: What It Is and How to Protect Yourself
One of the most dreaded risks when buying property is gazumping — and it can be both stressful and costly if it happens to you.
Understanding what gazumping is and how to minimise your risk is essential to protect your interests when making an offer.
What is Gazumping?
Gazumping occurs when you have a verbal agreement with a sales agent or vendor to buy a property at an agreed price — but before contracts are exchanged, another buyer steps in and secures the property instead.
This usually happens because the vendor has accepted a higher offer or more favourable terms from another party.
Unfortunately, verbal agreements are not legally binding in real estate transactions.
The sales agent is legally required to pass on any further offers to the vendor right up until the point of contract exchange.
Gazumping tends to occur more frequently in a seller’s market, where there is strong buyer competition and multiple offers on quality properties.
If you are gazumped, neither the vendor nor the agent is obligated to reimburse you for any costs you have already incurred — such as:
- Legal advice
- Building and pest inspections
- Strata reports
- Finance application fees
- Other due diligence expenses
Experiencing gazumping can be heartbreaking. The excitement of believing your offer has been accepted can quickly turn into deep disappointment.
How to Minimise the Risk of Being Gazumped
While you can’t eliminate the risk entirely, there are several ways you can reduce the chance of being gazumped:
1. Have Your Finance Ready
- Ensure your finance is unconditionally approved.
- Make sure your deposit funds are readily accessible so you can act quickly.
2. Complete Your Due Diligence Early
Before making an offer:
- Have your solicitor or conveyancer review the contract and negotiate any necessary changes.
- Organise your building and pest inspections (or strata inspections for units).
- Check with the local council for any development applications nearby that might affect the property.
3. Prepare to Exchange Unconditionally
- Obtain a signed 66W Certificate from your solicitor, which waives the standard cooling-off period and allows you to exchange contracts unconditionally.
- Attach the 66W Certificate to your signed contract when presenting your offer.
4. Maintain Regular Contact with the Agent
Stay in close communication with the sales agent until contracts are exchanged.
Don’t assume that a claim of a “higher offer” is just a negotiation tactic — in a competitive market, genuine multiple offers are common, and you must be ready to react quickly.
5. Exchange Contracts Immediately
- Aim to exchange contracts as soon as it is possible to do so.
Final Thought:
Speed, preparation, and professional support are your best defences against gazumping. By acting quickly and decisively, and seeking expert advice, you can give yourself the best chance of successfully securing the property you want.
