Gazumping and Gazundering

Gazundering and Gazumping Rates Reveal Property Market Revival

Gazumping has returned to the property market as confidence among estate agents reaches its highest level since the credit crunch began. Gazumping last hit its peak with buoyant property prices in the residential property market of the late 1980s and early 1990s when gazumping became commonplace (in England and Wales)Gazumping is possible here because a buyer's offer is not legally binding even after acceptance of the offer by the vendor. This is because, by s.2 of the Law of Property (Miscellaneous Provisions) Act 1989 and in order to prevent dishonesty, a contract for the sale of land must be in writing (a requirement of English law that dates back to the Statute of Frauds of 1677)

What Is Gazumping?
When the owner accepts the offer on a property, the buyer will usually not yet have commissioned a building survey nor will the buyer have yet had the opportunity to perform recommended legal checks. The offer to purchase is made "subject to contract" and thus, until written contracts are exchanged either party can pull out at any time. It can take as long as 10-12 weeks for formalities to be completed, and if the seller is tempted by a higher offer during this period it leaves the buyer disappointed and out-of-pocket.

Gazumping is hitting popular parts of London for the first time in months and it is now likely to strike other towns and cities where prospective buyers outnumber properties.

So is it farewell to Gazundering?
We hope so.When property prices are in decline the practice of gazumping becomes rare. The term gazundering has been coined for the opposite practice whereby the buyer waits until everybody is poised to exchange contracts before lowering the offer on the property, threatening the collapse of a whole chain of house sales waiting for the deal to go through.