Gazumping and gazundering – have you heard these terms but unsure of the meanings?
They are the disappointing facts of life for people who are involved with buying and selling property.
Firstly, gazumping. This is when a seller verbally agrees an offer on their property but then accepts a higher offer afterwards. This is extremely frustrating, however as verbal agreements are not legally binding as a written contract is needed, it is possible for sellers to gazump buyers. Sadly, as contracts are not written up until after the surveys and building checks, there is a large window of time that provides an opportunity for other offers to be considered and leads buyers to lose any money they have spent so far.
Gazundering is when a buyer sneakily waits until a sale is almost at completion before suddenly withdrawing their offer and then making a lower one. This trick relies on the possibility of collapsing an entire chain of property sales and so puts pressure on the seller to accept the lower offer.
When property prices are rising and it’s a seller’s market, gazumping is more common. Whereas gazundering occurs more when prices are declining and the ball is in the buyer’s court. Despite this, neither of these practices are hugely common due to the tension caused between sellers and buyers however it is worth knowing how to avoid them as they are still present.
Gazumping can be avoided by asking the seller to take the property off the market once they have accepted your offer and also by building a good rapport with the seller. Time is the greatest factor however, and contracts should be exchanged as soon as possible to avoid gazumping.
Gazundering can be slightly trickier to avoid depending on the situation. If a seller doesn’t have another interested buyer to fall back on, it can be difficult to deal with. However, it is a good idea for a seller to ask for the reasons that the buyer dropped their offer as the survey may have detected some legitimate concerns. Obviously, you can call the buyer’s bluff and refuse their lower offer outright.
If gazumping and gazundering are real concerns for your sale, you could get your solicitor to draw up an exclusivity agreement between both parties, effectively making the verbal offer binding. This might prove expensive, but it might be worth it to avoid the headaches associated with starting all over again. Furthermore, gazumping insurance exists – also known as Home Buyers Protection Insurance, and despite being an additional cost, for some people it has proven its worth.