Buyer’s guide  ·  NSW

Gazumping in NSW: what it is and how to protect yourself

Gazumping in NSW happens when a seller accepts your offer, then sells to someone else before exchange. Learn your rights and how to protect yourself.

You make an offer on a home in NSW. The agent tells you it has been accepted. Then, before you exchange contracts, the property is sold to someone else for more. This is called gazumping.

Gazumping in NSW is legal, and it happens more often in a hot market. The good news is that there are practical steps you can take to reduce the risk.

This guide explains why gazumping happens, what you can (and cannot) recover, and how to protect yourself.

What is gazumping and why can it happen in NSW?

In NSW, a property sale becomes legally binding only when contracts are exchanged. Exchange means the buyer and seller each sign a copy of the contract and the copies are swapped (usually by the agent or the lawyers). The buyer usually pays a deposit at the same time.

Before exchange, an accepted offer is just an agreement in principle. It is not binding on you or the seller.

Until exchange, the agent must tell the seller about every offer they receive, unless the seller has given written instructions otherwise. So if a higher offer comes in, the seller can accept it, and the first buyer is “gazumped”. See the NSW Government guidance on making an offer.

What happens if you are gazumped?

It is frustrating, but your legal options are limited:

• No compensation for costs: neither the seller nor the agent has to repay money you spent on legal advice, inspection reports, finance applications or other enquiries.
• Expression of interest deposit refunded: if you paid a deposit to show your interest and someone else signs a contract, you are entitled to a full refund.
• You can still make a new offer: you are free to make further offers until contracts are exchanged with someone else.

How to protect yourself from gazumping

You cannot rule out gazumping completely. But these steps reduce the risk:

• Get finance pre-approval before you make offers, and know how you will pay the deposit (usually 10% of the price, although a smaller deposit can sometimes be negotiated). A deposit bond can be an alternative to cash.
• Engage a lawyer before you find a property. Many buyers wait until their offer is accepted, which can cause delays. If your lawyer is already engaged, they can review the contract the same day.
• Get the contract reviewed promptly. Ask the agent for the contract as soon as you are interested, and send it to your lawyer or licensed conveyancer straight away.
• Exchange as quickly as you can. Once contracts are exchanged, the seller is bound. For most private sales, you then have a 5 business day cooling-off period in which only you (the buyer) can pull out.
• Use the cooling-off period wisely. Arrange building and pest inspections and finalise your finance. If you pull out during cooling-off, you forfeit 0.25% of the purchase price.
• Ask for an exclusive period. You can ask the seller to agree in writing not to deal with other buyers for a short time while you finalise things. This needs a properly drafted agreement, so speak to your lawyer.
• Ask the agent to confirm that your offer has been passed on to the seller. Agents are not required to confirm in writing, but most will.
• Be ready to respond. If you really want the property and another offer comes in, you can increase your offer.

For more tips, read our guides on how to make an offer for a property and the cooling-off period in NSW.

Why sellers can change their minds

Sellers are not obliged to sell to the highest bidder, and they can change their minds at any time before exchange. A seller may choose a lower offer because the buyer is ready to exchange sooner or offers better terms, such as a shorter settlement.

That is why being organised and “exchange ready” can be as persuasive as a higher price.

Can gazumping happen at an auction?

No. At a NSW auction, the sale is binding when the hammer falls, and the winning bidder signs the contract on the spot. There is no cooling-off period for auction purchases, so you need your inspections and contract review done before auction day.

Read our auction buyer guide for more.

Gazumping FAQs

Is gazumping illegal in NSW?

No. Because a sale is not binding until exchange, a seller can accept a higher offer. But agents must follow conduct rules, including passing on all offers and not misleading buyers.

Can I get my costs back if I am gazumped?

Generally, no. The seller and agent do not have to compensate you for legal, inspection or finance costs. An expression of interest deposit must be refunded in full.

What is the best way to avoid gazumping?

Have your finance and lawyer ready before you make an offer, and aim to exchange contracts as soon as possible after your offer is accepted.

What is gazundering?

It is the reverse of gazumping: a buyer lowers their offer just before exchange, hoping the seller will accept rather than lose the sale.

This article is general information only and is not legal advice. It reflects NSW law at the date of publication. Please contact us for advice about your circumstances.

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