Every property buyer’s nightmare is called Gazumping.
Gazumping is the situation whereby a seller accepts an offer on their property but at the last minute a higher bid from another buyer causes them to change their mind. The initial buyer is put in a difficult and stressful situation, and left at a crossroads of whether they should increase their offer to surpass the current highest bidder or admit defeat and withdraw altogether. Gazumping occurs mostly in a market that has more buyers than properties available for sale, and therefore due to the product of supply and demand this can cause bidding wars.
The challenge with gazumping is that without the exchange of contracts, the sale is not made legal and therefore the seller or buyer has the power to withdraw whenever he so desired. Estate agents are legally obligated to tell vendors of all the bids on the property for sale, even when the agents have accepted an offer.
How to avoid Gazumping
Never delay sales because the faster the sale the less chance for seller to withdraw.
Try and get a seller whose agent has a policy on gazumping wherever possible.
Always be in touch regularly with the vendors or agents to give them an impression you are highly interested in the property. Doing this will reduce the chances of them considering other offers.
Perhaps decide on having a pre-contract agreement. This prevents you from losing out in the course of the bargaining. This agreement is when both you and the seller agree to pay a percentage of the purchase price to a stakeholder and the exchange will be for a specified period.
Request for an exclusivity treaty with the seller from your lawyer and this will provide you the exclusive right to the house as long there is contract exchange. Although the seller is usually paid a fee as benefit.
Always insist the particular house should be delisted from the open market immediately your bid or offer has been accepted. This will prevent other interested buyers to make bids again.
Let the seller and agent know you’re still very much interested in the house if you are eventually gazumped. Request that you are contacted if the new buyer withdraws.
Equal but opposite, a seller’s nightmare.
In simple words, it is the opposite of gazumping. This involves the reduction of the offer you made on a property after the acceptance of your initial bid. Gazundering comes to play in the process of contract negotiations and it is before exchange of contracts has been done. Note that it is when an exchange of contracts has occurred that a sale is legally sealed. If the seller refuses the price this could break the chain of transactions going through simultaneously.
Gazundering occurs in markets that has the number of sellers superseding the number of buyers. It can also be as a result of decline in the prices of properties in a particular area. When buyers are reducing their prices most of the time, it commonly goes with a threat of pulling out if the sellers disagree with the reduction of price. This now puts vendors in a complicated situation. Since vendors are habitually buyers, they can therefore risk their own purchase if their sales subside, and therefore the chain is broken.
How to avoid Gazundering
Never delay sales because the faster the sale the less chance for buyers to review their biddings.
Deliberate on having a pre-contract agreement. This prevents you from losing in the course of the bargaining. This agreement is when both you and the buyer agree to pay a percentage of the purchase price to a stakeholder and the exchange will be for a specified period.
Fix an asking price that is accurate; because the longer it takes you to sell your house, the more the chances of you accepting a lower price.
Always be open about any problems with the property. Doing this will prevent the buyer from using any defects as an excuse to reduce the bidding price at a later date.
Be sensible and create a counter-offer because there are two sides with negotiating.
At Property People
we believe in honesty, integrity and transparency. We work hard behind the scenes to ensure that a sales process goes smoothly, that all parties are kept in constant communication and if there are any obstacles we try to clear the way as quickly as possible. You will see from our testimonials
page that our buyers and sellers have had a fantastic experience in all our past transactions. Each a success story in its own right. Once a sales process starts, it’s very rare that we let it reboot because of some unforeseen complication.
If you are in South West London and are looking for the peace of mind that comes with using honest, hardworking estate agents, call Natalie at Property People to discuss your requirements. I will work tirelessly to find you a buyer and see the sale through to completion. Call me on 020 8946 7171 or email me at [email protected]
As the house prices have increased by 12-20% over the last year to March 2014, there has never been a better time to put your property on the market and unlock its maximum value.
By Natalie Elms. Senior Sales & Lettings Negotiator at Property People. Estate agents in Wimbledon Park
Tags: Gazumping, Gazundering, property buying headaches, estate agents in south west London, Estate agents in Wimbledon Park, estate agents in southfields, lettings agent in Wimbledon, reliable letting agent, house prices increase,