The Government should take a close look at the practice of ‘Gazundering’ as well as ‘Gazumping’ in its forthcoming review of the house buying market in England and Wales, according to a leading Coventry and Warwickshire estate agent, Loveitts.
Communities Secretary Sajid Javid has announced a “call for evidence” from mortgage lenders, solicitors and estate agents about the pros and cons of the present system of buying and selling houses, with a focus on the problems of gazumping.
Gazumping is the well-known practice of a prospective buyer swooping in at the last minute with a higher price after the seller has already accepted an offer from another buyer. As well as disappointing the original buyers, it can disrupt whole chains of sales.
Gazundering is the opposite practice, where buyers lower their offer at a late stage after sellers have turned down other buyers.
Chris Priestley, Head of Residential Sales, Loveitts, commented:
“We welcome the government’s proposals to start looking at the house buying process within England and Wales and in particular at the problems created by ‘Gazumping’, which is long overdue for reform. Gazumping is a practice that has gone on for a long time and which causes untold stress to house buyers. While it obviously important to sellers that they achieve the best price for a house – which is often their biggest asset – there are better ways of achieving this than Gazumping.
“However, just looking at ‘Gazumping’ is not enough – there also has to be protection for sellers from the opposite problem – ‘Gazundering’ - where buyers drop their offer price close to an exchange of contract, leaving the seller in a position where they either have to bite the bullet and accept the lower price, or remarket the property.
“It would be nice to see a system that works for both buyers and sellers, tying both parties into an agreement when an offer is agreed and accepted. Such a system may require that a survey has to be done before a property goes on the market. This would help establish a true asking price based on the condition of the property but also give the buyer more knowledge of the property so they can make a more educated decision.
“The way in which we buy and sell homes in England and Wales is antiquated and needs to be brought up to date. We could certainly take some lessons from Scotland where the process is more transparent and fairer on both parties.”
Gazumping is rare in Scotland because many properties are sold under a ‘sealed bid’ system where buyers submit their offers in a sealed envelope and all bids are opened after a set closing date, with the seller deciding which offer to pick. Properties are generally removed from the market once contract negotiations are underway.