Nothing strikes fear into the hearts of homebuyers like gazumping. And nothing gives sellers the heebie-jeebies like gazundering. They’re the twin terrors of the property market that break chains and shatter dreams faster than you can say, “kiss your dream home goodbye”.
But what, exactly, is gazundering? And what is gazumping when it’s at home? We’ve got a gazillion bits of useful information below. Read on and you’ll learn the difference between the two and, more importantly, how you can reduce the chances of either one happening to you.
What is gazumping?
Gazumping is when a seller agrees to sell their home to one person but then suddenly changes their mind when a better offer comes along. It’s not exactly ethical, but it’s amazing how many sellers can live with a guilty conscience when they’re offered £££££s extra.
What is gazundering?
Gazundering is when buyers suddenly lower their offer before a contract is signed. Is it cheeky? You betcha. But sadly there’s no shortage of brazen buyers who’d happily sell their soul to save a few grand.
How common is gazumping?
According to this, nearly a third of homebuyers have been gazumped in the past. And the statistics are even grimmer in London, where a whopping 47% have had the carpet ripped out from under them. Ouch.
However, your risk might not be this high. It depends on how competitive the market is in your neck of the woods. The greater the number of desperate buyers, the more chance there is of being gazumped.
Is gazumping legal?
Yes, unfortunately. Both gazumping and gazundering are perfectly legal in England and Wales. Things are different in Scotland, however, where a sale becomes legally binding once an offer is accepted. That’s Nicola 1, Boris 0.
When does it happen?
Gazumping and gazundering can happen at any time before exchange. Although, if it’s going to happen, it’s best that you’re let down early in the home-buying process. Last-minute gazumping and gazundering can squander thousands of pounds in costs.
Are gazumping and gazundering fair?
Nope. It’s shattering for gazumped buyers to lose their dream home this way. It can have serious financial implications, too. If you’ve already shelled out lashings of lolly on surveys, mortgage arrangement fees and conveyancing costs, then being gazumped really stings.
Gazundering can have serious implications, too. For example, sellers might be unable to afford their onward purchase if they’re suddenly offered less. This can affect entire chains. And all so the buyer, who’s a bit of a meanie, can save a few bob.
Which is worse?
Whereas gazumping usually feels opportunistic – a rival bidder is essentially throwing his wallet around – gazundering often feels more calculating and underhand.
Buyers who gazunder, for example, usually do so because they sense that the seller is in a weak position – either because their property has been on the market for a while or they’re in a chain.
Knowing that the vendor will be back to square one if they refuse the lower offer, the gazunderer gambles that the seller will be forced to accept a reduced price through gritted teeth.
Are gazumping and gazundering ever justified?
Not when it comes down purely to greed, no. However, there are some circumstances in which gazumping and gazundering are understandable…
Gazumping is sometimes justified if the original buyer is dragging their feet. This can make the seller nervous, especially if they’re in a chain and don’t want to lose their onward purchase. A different buyer who can exchange and complete quickly might be a safer option.
Gazundering isn’t always sneaky, either. For example, a survey might reveal hidden defects that require pricey repairs. In these circumstances, the buyer is perfectly entitled to lower their offer.
Finally, a buyer trying to gazunder might have realised that they originally offered too much. Although this won’t ease your pain as a seller, it’s easier to forgive someone who thinks they’ve made a mistake than someone who’s simply trying to rip you off.
How to avoid being gazumped
Regrettably, there’s nothing you can do to stop someone trying to gazump you. However, there are things you can do to keep the seller on your side…
If you touch base with your vendor regularly, organise a survey quickly, chivvy along your solicitors, and show that you’re a committed and reliable buyer, then they’ll be inclined to ignore rival bidders.
It’s also worth building a relationship with them. Meet them at the property under the guise of measuring up. It’s harder for someone to let you down if they’ve looked you in the eye.
There are other practical steps you can take, too. Ask the seller to take their property off the market as soon as your offer is accepted. This could keep rival bidders from knowing about the property.
You could also pay for a ‘lock in’ agreement, where your vendor agrees not to consider other offers for a set period of time. You could also consider Home Buyer Protection Insurance in case the worst happens. This helps you claim back the survey and conveyancing fees lost.
How to stop gazundering
Once again, there’s little you can do to stop an unscrupulous buyer trying to gazunder you. But you can minimise the risk. For starters, always choose a chain-free buyer if you’re lucky enough to have multiple parties interested in your home. These buyers move quickly, can’t be gazundered themselves, and are less likely to pass unexpected costs on to you.
It also pays to set a fair asking price in the first place. Then your buyer won’t have regrets about their offer. It’s definitely worth appointing an experienced estate agent, too. Quality agents are good at dealing with pushy buyers who try their luck.
Finally, don’t hide potential problems with your home. Always be transparent. Issues are likely to get picked up by a surveyor anyway. And then you’ll have to renegotiate in an atmosphere of mistrust. Sigh.
Is your agent in on it?
Forget about conspiracy theories. Although agents receive a set commission for selling your home – usually something in the region of 1-3% - the amount they receive is too small for gazumping to be worth their while. Even if a seller makes an extra £15,000, for example, this only amounts to about £150 for the agent. It costs them far more to start again with a new buyer.
Therefore, if you want a conspiracy, go back and watch the X-Files. Did you know that FBI agents are actually space lizards?