You’ve found the home of your dreams and excitedly submitted an offer and it’s been accepted – hooray! The temptation is to feel that you are now home and dry and the property is yours. Nothing can take this away from you and you reach for that bottle of expensive champagne you’ve been saving to celebrate just such a moment. Then the phone rings with dreaded news – your seller has had a better offer and you either need to raise yours to secure your future home or you go back to square one. This is known as gazumping and it can be distressing, stressful and frustrating. Not only that, but any costs that have been incurred during the process of purchasing a home, such as obtaining a mortgage or instructing a survey cannot be recouped. Dismal news indeed.
Gazundering is another term often heard when buying and selling property and equally as infuriating. Gazundering is the act of a buyer submitting a lower offer than previously accepted by the seller, usually right before the exchange of contracts. This places a seller in a difficult position – pull out and start all over again or accept a lower offer to avoid the stress and perhaps the collapse of a chain.
In this article, we look at what you can do to hopefully avoid being gazumped and gazundered and how to deal with it should it happen to you.
Surely Gazumping and Gazundering Can’t Be Legal?
This is a common misconception. Despite many petitions and calls over the years for the Government to act and make gazumping and gazundering illegal, unfortunately as things currently stand, they are perfectly legal actions to take. Estate agents are obligated to inform a seller of all offers made and until exchange of contracts, nothing is legally binding.
How Can I Avoid Being Gazumped and Gazundered?
Speed is of the essence here. The longer the time between making an offer and exchange, the more chance you have of being gazumped. Ensure that you have all your ducks in a row either prior to making an offer on your dream home or as soon as possible afterwards. This can include getting your mortgage offer in principle in place, instructing surveys and a solicitor too.
Rapport With Your Buyer/Seller
Although this is unlikely to be a long-term relationship, try to build a level of rapport with your buyer/seller. Keeping things friendly and on good terms can create good feeling and the potential to feel a certain duty to you to carry the transaction through to completion. Try to do all that is asked of you on time and keep the other party informed of any potential delays, so that trust is built in your commitment to the transaction.
Although they don’t have to, you could ask your seller to take their property off the market as soon as they have accepted your offer and have ‘Sold Subject to Contract’ put next to any listing on property websites to deter other buyers. A ‘Sold’ sign outside the property in place of a ‘For Sale’ sign means less chance of a speculative drive-by buyer making an offer.
A lock-out agreement is an agreement between a purchaser and a seller that once an offer is made, they will not accept any further offers during a certain period. This gives you as the purchaser time to do all that you need to do without the pressure of a potential gazumping. Be aware though that a seller may be reluctant to sign an agreement as there is no benefit to them. There will also be a cost to you associated with drawing up an agreement.
A Fair Price
Gazundering is more likely to happen if your asking price is very near to the top end of the market valuation. A buyer is likely to feel that they aren’t getting value for money if they see others offering similar properties to your home for a lower asking price and lower their offer accordingly. Price your home at a fair and reasonable asking price, in line with other similar properties in your area.
Sky High Offers
Tempting as it is to snap it up when a very inflated offer is presented to you, take time to consider if this just gives the potential for your buyer to get ‘buyer’s remorse’ later down the line. Check with the estate agent to be sure that a buyer is serious about the offer that they have made. Don’t be afraid to keep checking that the sale is progressing as it should be – especially if things seem to be slowing down.
I’ve been Gazumped or Gazundered! What Can I Do?
Loss Of Costs For Your Buyer
Of course, there will always be those buyers who, despite all your best efforts, will lower their offer at the last minute and there is nothing you can do to account for this. Bear in mind that they too will lose all their costs if they choose this course of action, should you turn their offer down – hopefully this would be enough to dissuade them from doing so.
Residential Abortive Transaction Insurance
A mouthful to say but a relatively simple insurance which can ensure that should you get gazumped or gazundered, your costs to date in the sale are covered. Although not ideal to lose the house of your dreams, at least not losing out financially somewhat sweetens the bitter pill to swallow.
Keep Calm And Counter On
If you do get gazumped, although the situation is stressful, stay calm and consider preparing a counteroffer. The danger here is that a bidding war could break out so approach this strategy with a cool and realistic head. If a counteroffer is not possible due to financial constraints, don’t lose heart. Sometimes, things were just not meant to be, and an even better property could be just around the corner.
We hope this article has given you some useful tips and information should you find yourself in a gazumping or gazundering scenario.
If you are thinking of selling your home or are taking the first steps in the property market, we would love to help. We are an award-winning estate agency, offering first class residential sales and lettings services throughout Lincolnshire, Hull & East Riding. You can find your nearest office here.