What is gazumping and is it legal in NSW?
Gazumping is legal in NSW. Under a private treaty sale, no contract exists until both parties sign and exchange, so a vendor can accept a better offer from another buyer even after verbally agreeing to sell to you. There is no specific law against it in NSW, which means the best protection is speed — getting finance ready and contracts reviewed so you can exchange quickly.
The Fuller Picture
Gazumping happens when a vendor, having verbally agreed to sell to one buyer, accepts a higher or more attractive offer from someone else before contracts are formally exchanged. In NSW, a contract of sale is not legally binding until both parties have signed and exchanged copies. Until that point, either side can walk away, and a vendor is free to keep negotiating with other interested buyers, no matter what was said or agreed verbally.
It gets more complicated in practice. Sometimes an agent keeps marketing a property as "under offer" while quietly taking backup offers, which is legal and common. Other times what looks like gazumping is really the original buyer running out of time — finance not confirmed, deposit not ready, or a solicitor slow to turn contracts around — and the vendor moving on to someone who can actually settle. The distinction matters because it changes what, if anything, a buyer could have done differently.
NSW does not have specific anti-gazumping legislation. The main buyer protection available is the statutory cooling-off period, typically five business days for residential property bought via private treaty, which can be waived with a Section 66W certificate. That protection applies after exchange, not before, so it does nothing to prevent gazumping itself. Some buyers use holding deposits or written letters of intent to signal seriousness, but these are informal gestures rather than legally binding commitments.
What This Means for Your Purchase
Your exposure to gazumping is really a function of time. The longer the gap between a vendor verbally accepting your offer and contracts being exchanged, the more opportunity there is for another buyer to come in with a better offer. Buyers who treat verbal acceptance as "done" and slow down are the ones most often caught out.
Practically, this changes how you should approach an offer. Have your finance pre-approved before you start looking seriously, brief a conveyancer or solicitor in advance so they can turn around contract review the same day, and be upfront with the agent that you're ready to exchange quickly. Buyers who can move fast are far less attractive to gazump than buyers who need another week to get organised.
The financial and legal implication is worth being clear-eyed about: if you are gazumped, you generally have no legal recourse. You cannot force a vendor to sell to you, and costs already spent — building and pest inspections, legal fees, valuation fees — are usually not recoverable. That risk is a strong argument for not paying for third-party reports until you're genuinely close to exchange.
How This Shows Up in the Illawarra
Most houses in the Illawarra still sell by private treaty rather than auction, which means gazumping risk is a live consideration for buyers here, not just a Sydney problem. In tightly held pockets such as Thirroul, Bulli, and Austinmer, well-presented family homes can draw several interested buyers within days of listing, and an agent juggling multiple verbal offers has every incentive to keep the field open until contracts are actually signed.
In more affordable, higher-turnover suburbs like Warrawong, Berkeley, or parts of Shellharbour, the risk is lower simply because there's usually less competing interest, but it still happens, particularly when a property is priced below what the local market will bear and word gets around quickly. Either way, the buyers who move through pre-approval and legal review fastest are the ones who end up exchanging, not necessarily the ones who offered first.
Frequently Asked Questions
Can a vendor legally back out after verbally accepting my offer?
Yes. In NSW nothing is binding until contracts are signed and exchanged, so a verbal or even written offer acceptance does not stop the vendor from selling to someone else.
Isn't a signed offer or holding deposit a form of contract?
Not on its own. A holding deposit shows intent and can encourage an agent to slow down other negotiations, but it is not a substitute for an exchanged contract and doesn't create a binding obligation.
Are first home buyers more exposed to gazumping?
Often, yes, mainly because first home buyers are more likely to still be finalising finance or waiting on a conveyancer when an offer is accepted, which lengthens the risk window. Getting pre-approval and legal support sorted before offering closes much of that gap.
How quickly should I expect to exchange after my offer is accepted?
There's no fixed timeframe, but the sooner the better. Buyers with finance and legal review already organised can often exchange within a few days; those still sorting things out may take a week or more, which is exactly the window gazumping happens in.
Can I negotiate a shorter exchange period into my offer?
Yes, and it's worth asking for. Making clear to the agent that you can exchange quickly, and asking for contracts up front, gives the vendor less reason to keep shopping the property around.
Does a buyers agent help reduce gazumping risk?
Yes. A buyers agent manages timing, keeps pressure on the process, and coordinates with your conveyancer and lender so there's no unnecessary delay between an offer being accepted and contracts being exchanged.
If you're navigating a private treaty purchase and want someone managing timing and risk on your side, get in touch for a chat about your situation. We work exclusively for buyers, not vendors.
