The term “gazump,” most commonly seen in British or Australian English, refers to a situation in which a piece of real estate is sold for more than the agreed-upon price. There are several situations in which a gazump can occur, ranging from situations which are most definitely illegal to those which are simply ethically questionable. Gazumping usually occurs when the market is hot, while when the market is depressed, it is possible to see a gazunder, in which a buyer abruptly lowers the offering price at a critical stage in negotiations.
In a classic gazump, two people agree upon a reasonable price for a piece of real estate, enter a contract, and start the prolonged process of inspecting the property and making last minute negotiations to prepare for closing. Then, a third party comes along and offers the sellers more than the agreed-upon amount, and the sellers terminate the contract with the buyers to take advantage of the higher price. While this practice is not necessarily illegal, it is generally viewed as not very polite, as long as both parties were negotiating in good faith before the gazump occurred.
On the more illegal end of things, a buyer might be caught in a scam in which he or she thinks that a gazump might be about to occur, thereby pushing the buyer into offering a higher pricer to avoid losing the property. This scam is usually perpetrated by an unethical seller who enlists assistance to convince the buyer that someone else is offering more for the property. If a buyer can prove that he or she was pushed into offering more because of a scam, there may be legal consequences for the perpetrator of the scam.
The gazump is most commonly seen in crunched real estate markets where prices are constantly rising. Reluctance to formalize a contract on a seller's part can indicate that the seller is holding out for a higher price, and should alert buyers to the fact that they may be making a deal with someone who will readily dump them for a higher price. On the flip side of things, sellers may feel entitled to put their properties back on the market or to accept another offer if they feel that the buyers are not acting in good faith, or that the buyers are dragging their heels unreasonably.
The origins of this rather interesting word appear to lie in the early 1900s, when it was first used to mean a swindle or fraud. This word appears to be Yiddish in origin, like many other colorful words in the English language, such as “schmaltz.” However, no clear link to Yiddish has been established. “Gazunder” is a portmanteau of “gazump” and “under” which dates to the 1980s.