BROWSE

Gazump

Definition

Gazumping occurs when a seller accepts an oral offer on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase. The term gazumping is most commonly used in the UK, Ireland and Australia, although similar practices can be found in some other jurisdictions.

What is 'Gazump'

The practice of raising the price of a previously agreed-upon real estate transaction. A gazump refers to a situation where a seller and buyer of a piece of real estate (such as a parcel of land or a house) have in place a verbal agreement regarding price, but where the price is suddenly raised shortly before or at the signing. This sudden increase in price is a gazump, and while the procedure typically falls within the boundary of the law, it is often considered an unethical practice in real estate.

Explaining 'Gazump'

A seller who raises the price at the last minute may try to justify the gazump by citing competing bids. In this case, the seller states that another, higher bid has been made on the property, thereby compelling the buyer to agree to the higher price or risk losing the property. The seller may also infer that if the buyer does not agree to this new price the price could continue to increase with additional competing bids. If the buyer is motivated to purchase the property, he or she may agree to the higher price to avoid losing property or facing an even higher price. Conversely, the buyer can choose to walk away from the property because the transaction has not yet been closed.

For example, assume a home is on the market with a listing price of $200,000. You make an offer to buy the property for $195,000, and the offer is accepted by the seller. Before the closing, however, the seller informs you that he has received another offer for $199,000, and he will sell to the new buyer unless you increase your offer to $199,000 or more. Because the seller had already agreed to your offer for $195,000 and is now asking for a higher price, you have been gazumped. If the seller had not already agreed to your offer, then you would have simply been outbid.

A gazump is more likely to occur in robust real estate markets where prices are increasing, or in situations where the sale progresses too slowly and the seller is getting anxious (for example, if the buyer has not yet sold his or her property).


Further Reading


The disruptive changing accounting university environment: how accounting academics have been gazumped
research.avondale.edu.au [PDF]
… Disruptive Changing University Environments: Have Accounting Academics been gazumped … these times of disruptive change instead of allowing the system to “gazump” them … backgrounds comprising a mix from a broad spectrum of social and economic circumstances (Scown …

Challenges facing sustainable real estate marketing and practice in emerging economy: Case study of NigeriaChallenges facing sustainable real estate marketing and practice in emerging economy: Case study of Nigeria
eprints.covenantuniversity.edu.ng [PDF]
… Disruptive Changing University Environments: Have Accounting Academics been gazumped … these times of disruptive change instead of allowing the system to “gazump” them … backgrounds comprising a mix from a broad spectrum of social and economic circumstances (Scown …

Webster's New World English‐Spanish/Spanish‐English Business DictionaryWebster's New World English‐Spanish/Spanish‐English Business Dictionary
www.emerald.com [PDF]
… Disruptive Changing University Environments: Have Accounting Academics been gazumped … these times of disruptive change instead of allowing the system to “gazump” them … backgrounds comprising a mix from a broad spectrum of social and economic circumstances (Scown …

Managing budget cuts in Edinburgh's sport and recreation services: progressive localism in a resilient local authority?Managing budget cuts in Edinburgh's sport and recreation services: progressive localism in a resilient local authority?
www.tandfonline.com [PDF]
… Disruptive Changing University Environments: Have Accounting Academics been gazumped … these times of disruptive change instead of allowing the system to “gazump” them … backgrounds comprising a mix from a broad spectrum of social and economic circumstances (Scown …

A new face of economics <span style=[Review of Hugh Stretton's new economics textbook entitled Economics: A New Introduction.]' src='/thumbnails/?img=https%3A%2F%2Fsearch.informit.com.au%2FfullText%3Bres%3DIELAPA%3Bdn%3D200102479' />A new face of economics [Review of Hugh Stretton's new economics textbook entitled Economics: A New Introduction.]
search.informit.com.au [[Review of Hugh Stretton's new economics textbook entitled Economics: A New Introduction.]' href='https:/api.miniature.io/pdf?url=search.informit.com.au%2FfullText%3Bres%3DIELAPA%3Bdn%3D200102479'>PDF]
… Disruptive Changing University Environments: Have Accounting Academics been gazumped … these times of disruptive change instead of allowing the system to “gazump” them … backgrounds comprising a mix from a broad spectrum of social and economic circumstances (Scown …



Q&A About Gazump


Who can be involved in a gazump?

The seller and buyer of a piece of real estate (such as a parcel of land or house) can both be involved in this type of transaction.

What is a gazump?

A gazump is the practice of raising the price of a previously agreed upon real estate transaction.

Are there any laws regarding this practice ?

No , there are no laws against changing one's mind about selling something .

Can sellers justify their actions by saying they received other offers for their home?

Yes, but it is considered unethical because they had already accepted your initial bid before receiving other offers.

Can buyers walk away from transactions when they feel like they have been gazumped ?

Yes, buyers can choose whether or not they want to continue with transactions when there are changes made at the last minute .

Why does someone engage in this practice?

To make more money on the sale.

How do you know if you have been gazumped?

You will know that you have been gazumped if the price has increased at the last minute before closing.

What are some reasons for increasing your offer to close on a property?

If another person makes an offer for more than what you were going to pay, then it may be worth increasing your offer to close on the property. This way, you will not lose out on purchasing the property due to another person making an offer that was too good to turn down.

Is it legal for sellers to raise prices after accepting an offer ?

It depends on how much time has passed between accepting an offer and changing one's mind about selling something .