Tom Barry, Head of Residential Sales and Lettings, talks about ‘gazumping’ and ‘gazundering’ and ways buyers and sellers can stop it.
So, you have spent months looking at properties and finally found your dream home.
Your offer is accepted and you have all but moved in, and then all of a sudden the dream starts to unravel, when another buyer comes in with a higher offer. This is called ‘Gazumping’.
Gazumping occurs when either another buyer submits a higher offer, or the vendor decides to up the price independently, after an offer has already been accepted and contracts are being arranged. Essentially, vendors trying to get more money for their home.
The reverse is called ‘Gazundering’ where a buyer, who has had their offer accepted, and typically just before contracts are about to exchange, retracts their offer and submits a lower priced offer. Essentially, buyers trying to get a discount on their home.
If this story is familiar, you’re not alone. According to Treasury figures, Britons spend around £270million every year paying for property transactions that never happen, while figures from Which? Mortgage Advisers claim 28 per cent of property transactions fail before completion, costing disappointed buyers around £3,000 each.
So how can you stop this from happening?
The answer is a legally binding contract which locks in both the buyer and seller after the offer is accepted – which is what we at Keller Williams offer our clients.
We have partnered with a legal company called Gazeal to offer a binding contract that locks buyers and sellers into the property transaction from the minute an offer is agreed.
Here’s how it works:
1) An offer is accepted, then the buyer and seller receives a 14-day ‘cooling off’ period to ensure that they’re both satisfied with the deal
2) By this point we have already conducted the legal searches and survey’s so all of this information is shared. If this throws up legitimate issues with the property, then the buyer can back out of the deal in this two-week window without penalty
3) After 14 days the buyer and seller pay £250 each, which enters them into a contract
4) The property title is then Held in Trust or Escrow, which effectively means that the sales process is locked down and neither party can renege. The contract is 100% legally binding
5) The sale goes through to exchange and completion without a hitch!
This service is included in our bespoke KW One offer, which seeks to take the stress and hassle out of the property buying and selling process. KW One manages the whole property transaction – from instruction to sale - without the buyer or vendor having to lift a finger – here are the details of the service.
To find out more about Gazeal or our services, or indeed if you have any questions about gazumping or gazundering, contact your local Keller Williams broker.