How to avoid getting “gazumped” on your next property purchase

While it's often viewed as unethical, gazumping is a common and legal practice in Australia’s real estate industry. Find out how gazumping occurs and what you can do to minimise your risk of being gazumped.


Fact checked

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

You may have signed a contract and verbally agreed on a price, but nothing is set in stone until the exchange of contracts. As a buyer In Australia’s buoyant property market, you need to be cautious about the way in which you express your interest in a property and secure the final purchase.

If you don’t have your wits about you, not only will you lose out on the property of your choice, but you’ll have also drained your bank account with those conveyancing fees and other finance administration costs, for which you won’t be reimbursed.

What is gazumping?

Gazumping takes place when you have a verbal agreement with an agent or seller to buy a property at an agreed price, but then the property is not sold to you. This typically occurs when the vendor sells the property to someone else who has normally offered at a higher price or more favourable terms, before contracts are exchanged.

An agent is legally required to pass on all offers to the seller for their consideration. Prior to the exchange of contracts, the seller is free to negotiate with other prospective buyers as they see fit.

Generally, a sale is only legally binding on the vendor and buyer when contracts have been exchanged between both parties. This occurs when the vendor signs their copy of the sale contract and the purchaser signs their copy, and both parties exchange the signed contracts.

Once this takes place, the purchaser is then required to complete a deposit which is normally around 10% of the property price.

Did you know?

The Yiddish word "gazump" means to ‘overcharge.’

Should I use a conveyancer or solicitor?

How does gazumping occur?

In real estate transactions, there are conflicting interests between buyers and sellers- both of which can be adversely affected by gazumping. As a buyer, you may be forced to pay a higher price than what you verbally agreed on, or in the worse-case scenario, the property for which you made an offer is sold to someone else.

While it can be just as detrimental for a seller if your property is sold below market value, gazumping can also benefit the seller if it leads to a higher sales price or more desirable contract conditions, such as a shorter settlement period.

How can it affect me?

If this happens to you, neither the agent or the vendor are legally required to reimburse you for the funds you paid for legal services, such as conveyancing, inspections, or finance applications or associated costs for your intended purchase. However, your "expression of interest" payment or deposit must be refunded to you in full.

In some situations, you may be given the opportunity to “match” the alternative price, otherwise the property will be immediately sold to someone else.

How can I protect myself?

As a buyer, you must realise that even if your verbal offer is accepted by the vendor, until the contracts are formally signed and exchanged by both parties, you run the risk of being gazumped.

Here are some common ways you can protect yourself:

  • Organise finance: If possible, get a loan preapproval in which your lender will indicate that they are willing to lend you a certain amount of money to finance the purchase. Also make sure you have the 10% deposit available so there is no delay before the exchange of contracts can take place. You can also use a borrowing power calculator to find out an estimate of what you might be able to borrow before approaching a lender.
  • Legal guidance: Obtain a copy of the sale of contract and request that it is assessed by a solicitor or a lawyer to ensure that all relevant clauses, such as the cooling-off clause, are in accordance with state legislation.
  • Exchange contracts: Try to exchange contracts as soon as possible, as this will take the property off the market and secure the sale.
  • Building and pest inspections: During the cooling-off period, you should arrange for a building and pest inspection to ensure that the property does not have any structural or other issues.
  • Be prepared: Be mindful that the vendor is not obligated to sell to any specific person and is free to change their mind at any time prior to the exchange of contracts. Interestingly, vendors don’t necessarily sell to the person that makes the highest offer.
  • Make a reasonable offer: As a buyer, be careful not to make an offer that’s too low. If you make an offer that’s significantly below market value, there’s a greater chance that you’ll be gazumped by another buyer that’s willing to offer more. To help guide your offer amount, you can ask the selling agent for the sales history of comparable properties in the area to get a better indication of what the selling price will be.
  • Request written agreement: Ask the agent for a written agreement that they will notify you if another offer has been made, to give you the right to make a counter-offer.

Compare home loan options

Data indicated here is updated regularly
Name Product Interest Rate (p.a.) Comp. Rate^ Application Fee Ongoing Fees Max LVR Monthly Payment
Suncorp Back to Basics Home Loan
$0 p.a.
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.
UBank UHomeLoan Variable Rate
$0 p.a.
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Westpac Flexi First Option Home Loan
$8 monthly ($96 p.a.)
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
St.George Basic Home Loan
$0 p.a.
Up to $4,000 refinance cashback.
With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply). Low Rate Home Loan with Offset
$0 p.a.
Save on interest with a free 100% offset account and buy your property with just a 10% deposit. This loan is not available for construction.
IMB Budget Home Loan
$0 p.a.
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
IMB Budget Home Loan
$0 p.a.
A competitive variable rate for borrowers with 20% deposits saved. Available for NSW and ACT borrowers only.
HSBC Fixed Rate Home Loan
$0 p.a.
Lock in a competitive fixed rate for 2 years and buy your home with a 20% deposit.
IMB Fixed Rate Home Loan
$6 monthly ($72 p.a.)
NSW and ACT customers only. 2 years fixed interest terms and free access to redraw facility online. Available with a 5% deposit.
Well Home Loans Balanced Fixed Home Loan
$0 p.a.
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details and get a free consultation with an expert broker from Aussie.

By submitting this form, you agree to the Finder Privacy and Cookies Policy and Terms of Use

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2020 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the Aussie privacy policy.

After entering your details a mortgage broker from Aussie will call you. They will discuss your situation and help you find a suitable loan.

  • A comparison of home loans from multiple lenders.
  • Expert guidance through the entire application process.
  • Free suburb and property reports.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 8 years running (2013-2020)

Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 80% of the property's value. (Terms, conditions & exclusions apply).

Is there a solution to gazumping?

Many believe that selling and buying property at auction is one alternative to avoid being gazumped. This is because nothing is set in stone until the auctioneer closes the auction once the highest bid has been placed, and the contract is signed by both parties on the day.

However, the reality is that not all properties go to auction.

Frequently asked questions (FAQ) about gazumping

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site