What is gazumping?

Gazump. It might sound like a sound effect from an old Batman comic, but gazumping is no laughing matter. In its most basic terms, the word itself means ‘to cheat’ or ‘to swindle’. However, in real estate, it has a very specific meaning – and understanding that meaning could save you thousands.

What is gazumping?

A standard gazump in a property transaction might look something like this: A buyer shake hands with the vendor and their agent on a property deal. The buyer then carries out their due diligence, running checks like surveying or building inspections in the pre-formalisation period.

Then, just before the buyer and the vendor meet to finally sign off on the deal, another buyer swoops in with a higher offer and the first buyer is out in the cold. They just got gazumped.

Usually, the practice arises in a particular market context, where it’s moving upwards. It doesn’t really make sense in a falling market.

A legal grey area

Real estate agents around Australia have to comply with a long list of regulations, but one principle that’s sacrosanct is that they’re not allowed to work against the interests of their clients – that is, the vendor.

Gazumping usually happens in that no-man’s land between an informal agreement on a property between buyer and vendor – the handshake – and the actual contract signing day, which usually occurs sometime after.

The current set-up allows this to happen because it’s a legal grey area that arises from the fact that in most Australian states, the buyer and vendor aren’t obliged to sign legally binding contracts at the time of the sale agreement.

In most cases, if a buyer makes an offer on a property at a certain price, they’ll usually exchange signed agreements – more or less identical – with the vendor. The buyer’s says, “Yes, I agree to take the property at this price”; the vendor’s says, “Yes, we agree to sell it to you at that price.”

But here’s the rub: The buyer may still need to finalise things, like finance, that can take time. While they’re doing that, the agreement is still technically informal, and the vendor has the right to keep pitching the property on the open market. And yes, they may even sell it to someone else who – using our example here – already has their finance in place.

If, as a buyer, you get gazumped, you can’t recover the money and time you spent putting the deal together from your side. You’re out of pocket, with nothing to show for it, and you’re the only one who’s been put out. The vendor is still happily progressing their sale with the new buyer.

Generally, there’s very little a buyer can do about it.

The moral question

Gazumping often just comes from the vendor’s desire to get the highest price possible. You can’t really blame them for that. If someone came to you with a better offer on a property you were selling, and you had no legal restriction on whether or not to accept it, then it should be your choice, right?

A real estate agent may even take your offer – unbeknownst to the vendor – and shop it around, nudging those they think have a higher budget to grab the property before it’s gone.

The Queensland way

Queensland is one state that has virtually eliminated gazumping. 

In the Sunshine State, when a buyer makes a formal written offer to the vendor, the vendor then accepts or rejects it. If they accept it, the agreement is effectively binding, once it is delivered to the buyer’s solicitor. This system assures the buyer that the property is theirs, pending their own steps in finalising the transaction. It essentially closes the window where agents and vendors can continue playing the market – and remember this applies in a rising market where prices can shift upwards fairly quickly – to their advantage. 

There have been calls to introduce the Queensland approach nationwide, but as yet, gazumping is still allowed and openly practiced in other states around Australia.

Outside of Queensland, the best hope buyers have is to request a Queensland scenario, and strike up a binding agreement on the day, so they have some peace of mind they are not going to be gazumped.

Protecting our clients’ interests

In our twenty plus years in the Australian and international real estate market, we’ve developed a keen expertise in how to look out for our clients’ interests. When it comes to buying or selling in the Australian market, Resale Australia has your back.

About Russell Cotton

I love the property sector and have over 20 years’ experience in Australia and international markets working with Australia’s premier developers in property sales. I set up Resale Australia to help our internationally based vendors achieve maximum sales prices for their Australian properties.


  1. Im Kim Qui on March 20, 2021 at 5:06 am

    I was very upset this weekend
    My nephew and me went to Morwell to bid and look for a house
    We went to see the agent and put an offer As advertised for $210k
    On the adv.. it was not stated neg
    On the adv. there was no ranges stated eg.
    $210k – – 300k
    This practice of gazumping should stop
    In my opinion if they want more money they should hold an auction

  2. Im Kim Qui on March 20, 2021 at 4:14 pm

    I was gazumbed this weekend
    This is what I have learnt when buying a property
    The house was advertised for $210
    The agent told us it is very hot I Moe and Morwell
    We offered $210as per adv.
    This the third offeredwe made for a house
    I finally realised something is wrong
    My nephew and me made search. And read about Guzumping
    Tis is about ethics , false advertising,
    I am a 71 year old lady trying to help my 22 year old nephew
    To buy a house in the country and on the
    fringe of Melbourne
    This type of practice must stop as there is no transparency
    If the agent wants more money the house
    Should be sold in auction so that there is
    This will type of action does destroy people dream of ownership of a home
    Told the agent stockdale and leggo in morwell
    ThAt I am going to ring the REIV to. Find out if
    This practice is legal
    Was told by the Boss that if I do that he will not have anything to do with me

    I’m kim Qui
    0425 847. 543

    this weekend

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