Gazumping, Gazundering and Gazanging: Not As Fun As It Sounds.
The news is forever reporting rising and fluctuating house prices; one day it will be a prime time for house buyers to get on the property ladder, but on another it could be a completely different story.
In these uncertain times, you should be very aware of Gazumping, Gazundering and more recently, Gazanging, rearing their ugly heads.
They may have funny names, but you certainly won’t be laughing if any of them happen to you.
What is Gazumping?
Gazumping occurs when a Seller refuses (normally at the last minute) to authorise his or her Conveyancing Solicitor to exchange contracts on their property.
Their reason for doing this is normally because they have found a Buyer willing to pay a higher price for the property.
Due to the housing market at the moment (more buyers than there are houses), gazumping is an ever present, niggling problem.
Whether or not you consider Gazumping to be a rather dastardly ploy, it inevitably ends in disappointment for the original Buyer, who after paying out for local searches, surveys and other expenses, will be considerably out of pocket.
Legally, an unsuccessful Buyer cannot force a sale, as an offer to buy land in England and Wales is not legally binding unless it is evidenced in writing; so unfortunately, they don’t have a leg to stand on.
What is Gazundering?
Gazundering is the reverse of Gazumping, and equally as frustrating. This is when a buyer decides to significantly reduce their offer just before exchanging contracts, leaving the seller with the difficult decision of whether to accept the offer or risk the deal falling through.
And the new-fangled Gazanging?
Although not a new concept, Gazanging was in full-force in 2011 when the market was considerably more uncertain and sellers were particularly lacking in confidence.
Gazanging is a term coined by In-Deed, and occurs when a seller decides against selling the property at all and leaves the buyer “hanging”.
Within the first six months of 2011, it was estimated that around 54,000 buyers were gazanged, leaving them rather frustrated and short on cash.
What can be done to avoid any of it in the first place?
- Make sure everything runs smoothly on your end; this should help speed up the process and gives less time for the other party to have second thoughts.
- Check to see if any estate agents have a policy on Gazumping, Gazundering and Gazanging.
- Speak to your Conveyancing Solicitor about a “Lock Out” Agreement. This is a binding deed which mainly benefits the buyer, but provides the seller with a level of certainty.
- Ask your Conveyancing Solicitor to prepare a “Conveyancing Pack”, which is available from the moment you sell to help shorten the time to the exchange of contracts.
- Discuss with your Conveyancing Solicitor the possibility of an exclusivity agreement with the seller. This is where you pay the seller a small fee to have complete exclusivity on the property, provided that you exchange contracts by a certain date.
- Consider a pre-contract deposit agreement. This is where both parties pay a percentage of the purchase price to a stakeholder, and agree that contracts will be exchanged at a specific time. If one person pulls out of this agreement, then they forfeit their deposit money and the other party takes both deposits.
- Insist that the property be taken off the housing market once your offer has been accepted to avoid any competitors.
- If you have been gazumped, make it clear to the seller that you are still keen and would like to be notified if the other buyer pulls out.
- Be aware of the nature of the chain. For example, if a seller has not yet put an offer on another house, then you are more vulnerable to gazanging.
As a general note though, maintain communication with your Conveyancer, as they are there to ensure you achieve a stress-free move.
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