Gazumping and gazundering: what they mean and what you can do

Gazumping is when a seller accepts your offer on a property but then backs out after accepting a higher offer from a different buyer. Gazundering is when a buyer lowers their offer at the last minute, usually just before exchanging contracts. Both words describe someone changing the deal after it looked agreed.

Both cause real losses. The buyer who is gazumped may have paid for a survey and legal work. The seller who is gazundered may be in a chain and short of time.

1. The buyer makes an offer, verbally or in writing, and the seller accepts it. Nothing is binding yet.
2. The solicitors make enquiries and searches, the survey is done, and the mortgage offer is issued.
3. The solicitors agree a completion date and prepare the final contract.
4. Each side signs a copy and the signed copies are exchanged. The sale is now legally binding.
5. Completion follows, when the money is paid and the keys are handed over. Citizens Advice says completion usually follows about four weeks after exchange.

Citizens Advice notes that the exchange deposit is often 10% of the purchase price, but it can vary, and that a holding deposit of £500 to £1,000 may be asked for after an offer is accepted. If you drop out after exchange, you are likely to lose your deposit.

The gap between steps 1 and 4 is where gazumping and gazundering happen. The shorter that gap, the less room there is for either.

Citizens Advice says that if you had a set period where the seller agreed not to consider other offers and you are gazumped during it, you can sue the seller for breach of contract. Without that agreement, the seller has no legal duty to pay your costs, though you can ask for a contribution to costs such as survey fees.

You can also raise your offer. Which? advises not paying more than you can afford, more than the home is worth, or more than your lender has approved. Stay in touch with the agent, because the other buyer's sale may fall through.

Scotland has its own system, and the picture is different. Citizens Advice Scotland explains the steps:

• Your offer must be sent as a letter from your solicitor.
• Your solicitor tells the seller's solicitor you are interested. This is called noting interest.
• The seller will usually wait until several people have expressed interest, then set a closing date. Sealed offers are submitted by that date and the seller chooses which to accept. The seller does not have to accept the highest offer.
• An unconditional acceptance can create a binding contract immediately. Usually acceptances include conditions, and there is no binding contract until all conditions have been accepted. This is called concluding missives.
• Once missives are concluded, you are legally obliged to proceed. Withdrawing after that may mean paying damages for breaking the contract.

The main difference is where the binding point sits: it is set by the missives, not by an exchange of contracts. Which? also notes that in Scotland the initial agreement is not binding until the missives are drawn up. Your Scottish solicitor will tell you where you stand on a particular deal.