Over the past 18 months or so, stamp duty holidays, buyer demand and other indirect effects of the pandemic made for an extraordinary property market: for sales and lettings. However, if you asked any buyer about their experience making offers during this time, ‘stressful’ is likely an understatement. A term I heard all too often was ‘I / We have been GAZUMPED’. But what about the term ‘GAZUNDERED’? As the property market evolves, it's important sellers are aware of it.
Yes, the property sale process in England and Wales can prove a fractious journey for sellers and buyers alike. So, what can you do to safeguard your position, your goal, and ultimately your sanity – beyond the obvious of having a great agent...?
Firstly, an overview: Gazumping is the act of a seller accepting another offer, for any reason, when their property is already sold subject to contract. (Note ‘for any reason’. It’s often assumed money is behind this decision, which is not necessarily the case.) Gazundering is the act of a buyer reducing their offer close to, or upon exchange. Both these scenarios have hefty consequences, and the risk can, and should be minimised. Let’s see how…
BUYERS: Preparation is key! Before making offers, get your mortgage in principle, solicitor, and documents ready – you will need them! If also selling, know your chain – it’s incredible how many sellers do not know this. Once your offer is accepted, ask the property be sold subject to contract, going hand-in-hand with prompt responses to your solicitor’s requirements, keeping up to date with your mortgage advisor/lender, and getting your independent survey booked immediately. You must ensure constant progression from each angle, i.e. legal, financial, and logistical. Unless you have hired a buyer’s agent (not common practice in the UK), you do not get to choose the agent associated with your purchase, so acting upon these responsibilities can help safeguard the transaction. To minimise the effect of being gazumped, consider a home buyers protection insurance, and speak with your solicitor about putting a lock out agreement in place. Both incur costs, the latter requires the seller’s agreement.
SELLERS: Information and progression are key! Choose the best buyer - ‘best’ is not always synonymous with highest. A chain-free buyer is less likely to pass on any shortfalls and can be more flexible towards completion timescales. Focus is essential, so set an estimated and realistic exchange date. Regularly check in with your solicitor and estate agent for updates, responding to any enquiries and requirements promptly. Be transparent by providing all information necessary about your property, the surrounding area, and your onward plans. Be realistic about value, and ensure to do your sums, so that in the event gazundering takes place you know where you stand.
The underlying message is be prepared, be committed and be proactive. In turn, the level of organisation and confidence gained will play vital roles towards a successful transaction.
Contact me for a copy of my Checklist Guide to Buying and Selling.
