Gazumping and gazundering is covered as part of your CeMAP training, but it is important to understand what the terms mean and the implications that they can place on your customer’s house buying experience.
This is why we have laid out this helpful guide:
Gazumping is usually seen when the market is busy, with the correlation between buyers and sellers weighted in favour of more people looking to purchase than available properties. It occurs when a buyer places an offer, which is accepted, but then the seller goes with a higher bid from someone else.
Now, the accepted offer does not become legally binding until the contracts have exchanged between the solicitors of both parties, so prior to this point either party can withdraw from their commitment to the sale. In the event of gazumping, the original buyer has to decide whether to increase their asking price or risk losing the property, leaving them to start looking all over again.
Luckily, there are a few steps that can be taken to avoid gazumping, which will help to make the process as smooth and complication free as possible.
• The faster the sale, the less likely the customer will be gazumped. Ensure that your customers understand the whole process and what they need to do to keep things on track for a quick completion
• Clients should keep in regular contact with their own and the seller’s agent, to show they are proactive and keen to close the sale. This should minimise the agent’s likelihood to consider offers from elsewhere
• Once a customer has had an offer accepted, they should request that the agent “take it off the market”, which should prevent other buyers being able to step in
• If a client’s offer is gazumped, make sure that they stress to the seller’s agent how much they wanted the property and to let you know if the gazumper pulls out.
This brings us to the polar opposite of gazumping: gazundering.
As with gazumping, the act of gazundering is one that occurs before the exchange of contract, when the sale becomes legally binding. It is when the buyer places a reduced offer for the property, during the time that formal agreements are being negotiated. Gazundering is a more common practice when the market is slow and less buoyant, with more sellers than buyers. It may even be a truer reflection of a certain area’s property prices.
In practice, the buyer will state that they will withdraw from the sale if the property’s owner does not agree to the reduced offer. As the seller is normally also a buyer, often purchasing a subsequent property to move into, they risk the chain collapsing if they don’t agree.
• As with gazumping, a speedy sale process reduces the chance of gazumping.
• As a seller, ensure that when you set the asking price that you are realistic, factoring in the area and surrounding properties. The longer the property is on the market, the more likely a buyer will be to offer a reduced offer.
• Factor any works that need doing into the asking price, as these can be given as reasons for a lower offer being placed.