If you're buying or selling a property in the UK, you may encounter some unfamiliar terms that describe certain practices in the housing market.
Two of these terms are gazumping and gazundering, which can cause frustration and disappointment for both buyers and sellers.
In this blog post, we'll explain what these terms mean, how they affect the property transaction, and what you can do to avoid them.
What is Gazumping?
Gazumping is when a seller accepts a higher offer on their property, despite having already verbally agreed to another offer. This means that the original buyer loses out on the property and has to start their search again, as well as losing any money they have spent on surveys, conveyancing fees, or mortgage arrangements.
Is Gazumping Legal?
Gazumping can happen at any time before contracts are exchanged, which is when the agreement becomes legally binding. Gazumping is legal in England and Wales, but not in Scotland, where a binding contract is formed at an earlier stage.
What is Gazundering?
Gazundering is when a buyer reduces their offer on a property at the last minute, putting pressure on the seller to accept it or risk losing the sale. This can happen when the buyer discovers a problem with the property, such as a low valuation or a structural defect, or when the buyer exploits a weak market or a desperate seller.
Is Gazundering Legal?
Gazundering can also happen before contracts are exchanged, and is also legal in England and Wales, but not in Scotland.
How to Avoid Being Gazumped or Gazundered
Both gazumping and gazundering can cause stress and uncertainty for both parties involved, as well as delaying or jeopardising the completion of the sale. To avoid being gazumped or gazundered, the conveyancing team at Howells have provided these tips:
For the Buyer
If you are a buyer, try to move quickly and efficiently through the process of arranging your mortgage, survey, and conveyancing. Communicate regularly with the seller and their solicitor, and show them that you're serious and committed to buying their property.
You can also ask the seller to take the property off the market once they have accepted your offer, or to agree to a lock-out agreement that prevents them from accepting other offers for a certain period of time. You can also consider taking out home buyer protection insurance that covers some of your costs if you are gazumped.
For the Seller
If you are a seller, try to choose a reliable and trustworthy buyer who is in a good position to proceed with the sale. This could be someone who has a mortgage in principle, a cash buyer, or someone who is not in a chain.
You can also ask the buyer to pay a reservation fee or deposit that shows their commitment and gives you some compensation if they pull out. You can also consider taking out home seller protection insurance that covers some of your costs if you are gazundered.
Let Howells Help
If you're in the process of buying or selling a home, please get in touch with our residential conveyancing experts who will be happy to help.
