What is Gazumping and Gazundering?
They might sound like the sort of thing Roald Dahl’s BFG would do to keep fit, but house buyers and sellers know there’s nothing pleasant about gazundering and gazumping, so what exactly are they?
Gazundering - occurs when a buyer waits until the deal is almost done and then suddenly lowers their offer, which threatens to collapse the whole chain if the seller refuses.
Gazumping - happens when the seller accepts a higher offer from someone else at the last minute, after agreeing and offer verbally with the orginal buyer.
Is Gazumping and Gazundering legal?
Both practices are seen as rather underhanded although perfectly legal in England and Wales and can happen at any time before contracts are exchanged.
So what can be done? We’ve gathered the best advice to help you avoid, deal with, or salvage what you can from these stressful scenarios.
Who do I blame?
After being gazumped or gazundered, you’ll want someone to blame. Here’s a list of options; read them through twice before you do something you’ll regret.
- The estate agent: a good estate agent wouldn’t want anything to do with gazumping. Unfortunately, they are legally obliged to inform sellers of any offers they receive.
- The government: in 2017 a consultation was started on how to reduce gazumping, so take heart that future generations might be spared. A quick solution doesn’t seem terribly likely though.
- The seller: normally a seller must ask for their property to be removed from the estate agent's register in writing, and – understandably - some prefer not to do this until the contracts are signed. This can lead to higher and more tempting offers coming in. How forgivable accepting them is, we leave for you to judge.
- The buyer: when it comes to gazundering, it is good to remain calm and ask why a buyer has reduced their offer. Have prices declined in your area since the sale was suggested? Try to listen to the reason with an open mind rather than assuming they’re trying their luck.
How to avoid gazumping?
Gazumping is a particularly dastardly move because a buyer has inevitably spent a lot of money on surveys and fees; money they won’t see back. Our favourite suggestions for reducing the risk of being gazumped are:
- Act fast - it is recommended to chase anyone on your side holding up proceedings, and letting the estate agent know you’re acting fast so they can reassure the seller. Insist on an exchange of contracts as soon as terms are agreed.
- Be prepared - it is best to have as much in place as you possibly can; at least the deposit, solicitor and mortgage. This is great advice; you want to come across as so reliable the seller can’t imagine bothering with the uncertainty of another buyer.
- Establish a rapport with the seller - another favourite suggestion of ours, simple moves like turning up on time for viewings and being enthusiastic about the house can help build a relationship and encourage loyalty.
- Study the market trends - gazumping usually happens in a rising market when there are more buyers than sellers. Gazundering occurs in a falling market; knowing which you’re dealing with will help you gauge your position and when best to sell or buy.
- Request the property be taken off the market - if you’ve offered a fair price, ask for this in exchange. Refusal to do so may start ringing some alarm bells.
- Buy in the 'off-season' - Gazumping is fuelled by high demand; searching in November, December and mid Summer may help avoid competition.
How to avoid gazundering?
- Stick to your guns - there is no reason why you should accept below market value unless the initial survey or valuation was a disaster.
- Find out why the price has dropped - maybe there’s work you can do to the house to reassure the buyer of its worth.
- Reject the offer - this means deciding whether a quick sale is more preferable rather than waiting and looking for another buyer willing to pay more.
I have been gazumped/gazundered, what can I do?
The suggestions are not guaranteed methods to stop you being gazumped or gazundered, but having them in place might ease the blow.
- Ask the seller to sign an exclusivity agreement - this states that the seller will not enter into any agreement with anyone else. This doesn’t actually guarantee you’ll get the house, it just means that you can recover any damages/loses should you be gazumped. For this reason, don’t spend too much time on negotiating the contract; better to focus on hurrying through the purchase.
- Get insurance - some insurance companies offer gazumping insurance policies to cover fees you might have incurred.
- Try to sell your solicitor’s searches to the new buyer - if you’ve been gazumped, you won’t recover surveyors’ or legal fees, but this might work.
And finally, and easier said than done, try not to worry. Gazundering and gazumping really do happen rarely. If you can afford to, you can always offer more money as a buyer, or refuse an offer as a seller.
If you can’t afford to, take a deep breath and try and see it as an unfortunate hurdle and not a permanent setback. The house you eventually find will probably be much better than the house you just lost.