Buying a property is widely recognised as one of the Top 10 stressful things that you can do in your life and whilst it can be a breeze for many, it is anything but for others- especially if they have been involved in ‘gazundering’ or ‘gazumping’. Both of these practices are rather underhand techniques. It is certainly a good thing to be aware of both words and the unethical practices they describe and appreciate that when they are done to a house buyer or seller that neither are illegal.
What is gazundering?
Gazundering can happen with any house purchase, but is more likely to occur when property prices have started to drop and the buyer feels that they are paying ‘top whack’ for their chosen property.
Gazundering can occur literally at the 12th hour before the exchange of contracts. The house buyer has made an offer that has been accepted by the house seller. All is proceeding well until the house buyer suddenly revokes their offer and replaces it with a lower offer at the last minute. This is a very unscrupulous method used by house buyers, but it works as the house seller accepts the new lower offer because they are fearful that the buyer will pull out altogether.
Unfortunately, if the seller stays with the same buyer, who is to say that they will not try it a second time?
5 tips to try and avoid gazundering
● Deal with HouseBuyFast or a similar reputable cash for houses company as gazundering does not happen as their good reputations would be at stake.
● Negotiate with your buyer. You do not have to accept their lower offer unless you are happy to. Try and negotiate their renewed offer upwards – after all, they have incurred all the expenses of surveys and solicitors.
● Contact your solicitor. If they are experienced, they will have come across this situation before and will know exactly how to handle it – which will include speaking with the buyer’s solicitor.
● Speak with your estate agent. They too will have had experience of this situation. They will know the buyers and will also be able to find out more about their situation.
● When you put your house on the market, do so at a fair price. Be wary of ‘higher than the asking price’ offers and try to avoid buyers in a property chain – if they are forced to accept a lower price on their property, they will lower their offer on yours.
What is gazumping?
Gazumping is a practice that occurs in sought after areas and on popular properties. You may well have found the ideal property and have made an offer that has been accepted by the seller. Unfortunately the time between your offer being accepted and the exchange of contracts can be like negotiating a minefield!
Gazumping is the term given when the seller has accepted your offer then rejects it. The main reason for this change of heart is usually because they have been offered a higher price by another buyer. This is the situation that many buyers are finding themselves in at the moment because of supply and demand. The buyer is left with two options; either to swallow their disappointment and start house hunting again or to increase their offer to match and even top the alternative one accepted by the seller – but be warned, this often triggers a price war.
The second scenario that can lead to gazumping is when there is a delay in the sale proceedings. If for example, there are serious delays whilst the buyer tries to secure a mortgage, the seller can be tempted to reject their offer (having accepted it) and choose another buyer who is able to proceed more quickly.
5 Tips to try and avoid gazumping
● Good preparation is key. Make sure that you have a mortgage agreed by your lender (‘decision in principle’) and that your solicitor is ready to act swiftly. It is a good time to check that you have prepared all the necessary paperwork too. It is worth considering home buyer protection insurance as this covers you for all expenses should the sale fall through.
● Act swiftly to progress the purchasing procedure and keep an eye on your mortgage lender, conveyancer and solicitor to ensure that they are dealing with everything at an acceptable speed.
● Has the property been withdrawn from the market? If it is still being advertised another buyer could come along, so to protect yourself when the buyer accepts your offer, state that it is on the condition that the property is taken off the market straight away.
● Develop a good relationship with the seller – it will be far harder for them to reject your offer and go with another buyer. Ask the seller if they will do a ‘lock-out agreement’. This is a legal agreement in which they state that they will not sell their house to anyone else. Unfortunately, the seller can still choose to sell to someone else, but if they do, they will be liable for all your time-wasting expenses
● Ask the estate agent for written proof of the higher offer – don’t just take their word for it. Do not be tempted to react immediately by placing a counter offer. Far better to think things through clearly especially whether increasing the price will make it unacceptably high for such a property.
Having learned about gazundering and gazumping you are probably shaking your head at the prospect of selling your property and all the pitfalls to avoid. HouseBuyFast offers you the opportunity to sell your house quickly and effortlessly for a good price that is paid in cash into your bank account. This is definitely the stress-free way that is proving increasingly popular with house sellers everywhere.