Gazumping

Plain-English definition. Gazumping is when a vendor accepts a higher offer from a different buyer after already accepting your offer, but before contracts have legally exchanged. The original buyer is left with no purchase and any pre-purchase costs they've already incurred.

How it works in Australia. Gazumping is most common in NSW and Queensland's private treaty markets, where there's typically a gap of days or weeks between offer acceptance and contract exchange. Until contracts are signed by both parties and physically (or electronically) exchanged, no binding agreement exists — agents are legally obliged to present any higher offer. To protect against it, buyers can pay a small "holding deposit" (often refundable), demand an immediate contract exchange, or push for fast solicitor turnaround. Victorian and South Australian sales typically exchange contracts on the spot, making gazumping rarer there.

Concrete example. You verbally agree to buy a Sydney terrace for $1.45m. You commission a $600 building inspection and pay $1,800 for your conveyancer to review the contract. Six days later, before exchange, the agent rings: another buyer has offered $1.49m and the vendor has accepted. You've lost the property and $2,400 in non-recoverable costs. The vendor and agent have done nothing illegal.

Common confusion. Buyers think a paid "holding deposit" prevents gazumping. It doesn't — it just refunds if the vendor sells elsewhere. Only contract exchange (or signing in QLD/VIC) creates binding obligations.