Gazumping in NSW: Can You Be Outbid After Your Offer Is Accepted?
Yes, and it is legal. Until contracts are exchanged, the seller can take a higher offer. Here is how that gap works, and how to close it quickly.
Can you be outbid after your offer is accepted in NSW?
Yes. A seller can legally accept a higher offer right up until contracts are exchanged. Even after shaking your hand, even after you have paid the agent money and booked the building inspection. That is called gazumping. The good news is that the window it happens in is one you can shorten.
At a glance
- Is an accepted offer binding? No. Nothing is binding in NSW until contracts are exchanged.
- Can a seller accept a higher offer before exchange? Yes, that is gazumping, and it is legal in NSW.
- Does paying money to the agent secure the property? No. Only exchange does. Anything paid before exchange must be refunded in full if the sale falls through.
- How do you protect yourself? Speed. Exchanging with a cooling-off period is often the fastest route.
In plain English
Exchange is the moment two signed contracts are swapped, one from you and one from the seller, and the initial deposit is paid to the agent. If you exchange with a cooling-off period, that is usually 0.25% of the price, with the balance due when cooling-off ends.
Before that moment of exchange, there is no deal, no matter what has been agreed verbally, written in an email, or paid to the agent. After exchange the seller cannot sell to anybody else.
What gazumping actually is
NSW Fair Trading describes gazumping as an agent or seller accepting your offer at an agreed price and then selling the property to someone else, usually because that other buyer offered more.
It can also happen without another buyer at all. A seller who changes their mind, decides to relist in spring, or wants better terms is free to walk away from an accepted offer, because an accepted offer is not a contract.
Why it is legal in NSW
A property sale in NSW becomes binding on both parties at exchange of contracts, and only at exchange. Until then either side can change their mind. That cuts both ways: you are equally free to walk away with no penalty during that same window.
The agent is not being underhanded by passing on a higher offer either. An agent is legally obliged to present every offer they receive to the seller, right up until contracts exchange.
What does not protect you
A verbal agreement. Handshakes, phone calls and “the vendor has accepted” emails create no obligation on anyone.
A “holding deposit”. There is no such thing in NSW. Money paid to the agent before exchange shows you are serious, but it does not take the property off the market, and the agent can take payments from more than one buyer.
Having the contract sitting with your conveyancer. A contract in your hands, even a signed one, does nothing until it has been swapped with the seller’s.
How to close the gap
Every day between your offer being accepted and contracts exchanging is a day you can be gazumped. Everything below is about making that stretch shorter.
Have your conveyancer lined up before you offer, not after
Most of the delay in that window is administrative. If we already have your details and can start on the contract the same hour the agent sends it through, you have removed days from the timeline before you even made the offer.
Get the contract reviewed before your offer, if you can
The contract is available from the moment the property is listed. You are entitled to ask for it and have it reviewed while you are still deciding whether to offer. Buyers who do this are ready to sign when everyone else is still waiting for a review to come back.
While you have the contract, check the inclusions on the front page. Missed or wrongly ticked inclusions are the most common thing buyers and agents overlook, and they regularly delay exchange.
Have finance pre-approved and deposit funds ready
Not “we have spoken to a broker”, but an actual pre-approval, with the deposit sitting somewhere you can access it immediately. A deposit bond is worth asking about if your cash is tied up in a sale.
Put the offer in writing, with a date for exchange
Sellers respond to certainty as well as price. An offer that names a realistic exchange date and settlement date, deposit size (5% or 10%) and shows finance is already pre-approved often beats a slightly higher offer from someone who cannot move for three weeks.
Consider exchanging with a cooling-off period
This is the one most buyers do not know about, so it has its own section below.
“Which is going to cause more tears? Losing the deposit or losing the house?”
The cooling-off route, which almost nobody uses
NSW introduced the cooling-off period as anti-gazumping legislation. It is still on the books, and it is still barely used, which is a shame because it does exactly what worried buyers want.
The idea is that you exchange contracts straight away, which takes the property off the market immediately, and then do your building and pest inspection, finalise your finance and finish your enquiries during the five business days that follow. If something turns up that you cannot live with, you rescind and forfeit 0.25% of the purchase price. On an $800,000 property that is $2,000.
Whether that is the right call depends on how much of your due diligence is already done and how exposed you feel in that property market. It is a real option worth raising rather than assuming your only choice is to wait. Be aware that many sellers will ask you to waive cooling-off with a 66W certificate, which is a different decision with different risks.
Gazumping cannot happen at auction. When the hammer falls, contracts exchange on the spot and the sale is binding immediately.
What happens if you are gazumped anyway
Any money you paid the agent before exchange must be refunded to you in full. Ask for it in writing and keep the record.
What you cannot recover is everything else you spent. Building and pest inspection fees, conveyancing costs, strata report fees, valuation and finance application costs all sit with you, and neither the agent nor the seller has any obligation to reimburse them. That is the real cost of being gazumped, and it is usually somewhere between several hundred and a couple of thousand dollars.
If the agent refuses to refund it, tell us and we will take it up.
Can a buyer do the same thing to a seller?
Yes. It is called gazundering: a buyer agrees a price, then drops their offer just before exchange, betting the seller is too committed to walk away. It is legal for the same reason gazumping is. Nothing binds either side until contracts exchange.
For sellers the protection is the same too. Have your contract ready before you list, move quickly to exchange once an offer is accepted, and keep other interested buyers warm until it is done.
The short version
You cannot make gazumping illegal, and you cannot make a seller honour a handshake. What you can do is compress the days between acceptance and exchange down to as few as possible, because that window is the only place gazumping lives. Start with us before you offer rather than after, and the window gets a lot smaller.
Thinking of making an offer?
Talk to Justin, Julie, Amanda or Nicole before you do. Getting the contract reviewed early is the cheapest protection there is.
