Over 33% of Property Transactions Suffer Gazundering

In late February 2023 the House Buyer Bureau published into the public domain the results of its findings into the state of the property industry in 2023. The main headline figure found that in excess of thirty percent of property vendors have experienced the sharp practice known as gazundering in the previous half year.  

So What Is Gazumping?

The concept of gazundering takes place where the prospective property purchaser reduces the cost they are willing to pay before contract documentation is exchanged. The practice appears most likely to happen in a chain of transactions and could be serious for all parties involved. The vendor cognisant of the recent declined offer may mean that the whole property transactions train may be put into jeopardy and eventually capitulate. In time, vendors finding themselves in a  precarious position whereby they face no other alternative open to it but to transfer the property at the lower cost or abandon the transaction.  

The Police and Law Enforcement Authorities Can Stop Gazundering, Right?

The lay reader of this particular survey may be of the view that such behaviour is illegal and approach the law authorities to stop this occurring. However, they may be living under a misconception if they hold this view. This for the reason that those choosing to reduce their cost this late stage in transactions are doing nothing unlawful. 

A Question of Fairness?

Usually the practice is unfair and purchasers opting to reduce their price choose to because the vendor is in a potentially vulnerable position compared to the purchaser as the house may have been removed from the market and untold damage committed if a series of interrelated and linked transactions are involved. The perceived sharp practice has been known to cause a great deal of difficulties. 

So Why Are Property Purchasers Gazundering?

From an external perspective, it is easy to see the reasoning behind purchasers deciding to reduce their price. One reason could be communication. There have been numerous occasions whereby prospective purchasers of property discover something which may drop the cost of property it may be comprehendible for a purchaser to worry about the price. This may take place after a survey has occurred and issues are uncovered and the potential purchaser may foreseeably opt to reduce their offer. This may have a knock-on impact if there are several transactions.   

Lessons Learned?

So how can prospective property buyers mitigate the risk gazundering. They need to consider that gazundering does not violate the legal requirements in this area and they should be advised to remember that the time gap between when instructions are provided for the sale and the documentary paperwork being sent to the legal services provider is often vulnerable to exploitation by those seeking to gazunder a transaction. In this regard legal professionals, estate agents and mortgage advisors need to be encouraging clients to follow the below strategy: 

• start on the right foot with a purchaser
• build a strong relationship with clients
• save time and delay between the initial offer and contractual documentation being exchanged
• seek independent advice from a legal professional in the area of property law as early as reasonably possible
• get all their ducks in a row at an early marketing stage as far as documentary evidence is concerned and
• do all they reasonable can do to send out all the legal and contractual documents as soon as a purchaser is in position. 

Although there is no guarantee that   This will reduce the likelihood of the seemingly sharp practice of gazundering from taking place in future transactions. 

ASSESSING FIRMS

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