Gazundering is back, so why don’t you do something easy to stop it…
Posted by markharrison on October 18, 2010
If you’ve read my book, you’ll know that I don’t like gazumping or gazundering. This is because I believe that, once I’ve agreed a deal, I should stick by it.
In case you’re reading from outside the UK, these are two techniques that rely on the fact that it typically takes 6-8 weeks between verbally agreeing a property deal, and the lawyers coming up with contracts that can be signed, or, in the parlance “exchanged.”
- Gazumping is where a seller agrees a price, waits 6-8 weeks while the buyer is incurring cost in the various legal / financial paperwork that has to happen, and then refuses to sign the contract unless the buyer pays, say, 5% more than originally agreed.
- Gazundering is the opposite – where the buyer waits until the last moment, and then reduces his/her offer.
Now, many have said that the law should be changed to mean that deals are binding once agreed… but in practice, this just transfers the risk to the buyer, who then has to deal with all the legals/financials (which take time and money) before even making an offer.
However, if you are selling, there’s an easy thing you can do, up front. This assumes that you are selling through an estate agent.
Ask the agent a very simple question.
As far as you know, has this buyer attempted to gazunder anyone in the past?
Now, the agent may not tell the truth, or know … and it is, in practice, impossible to prove any liability against them even if they do lie… but the very act of asking will, sometimes, flush out something. Gazunderers only get good deals if people fall for their dirty tricks.
It’s a limited upside strategy, in that it seldom works… but it’s a zero downside strategy, in that I’ve never known it to backfire. Or, viewed another way, it’s a free bet that, if you win, makes you a few thousand quid.