Property Transactions: Gazumping and Gazundering Explained

In England and Wales, buying or selling a house can be a stressful process. The property transaction only becomes legally binding once written contracts have been exchanged. Until this point, the seller or buyer can change their mind and withdraw from the transaction or attempt to renegotiate the terms of the sale.

This blog post will explore gazumping and gazundering, two frustrating processes which can occur during property transactions.

What Is Gazumping?

Gazumping is when a seller has made a verbal agreement to sell their property to a specific buyer, but the seller decides to accept a higher offer at the last moment. This causes the original buyer to lose out on the property and will have to continue their search for a new home.

Is Gazumping Legal?

Yes, since a property transaction is not legally binding until the exchange of contracts, both parties can change their decision before the agreements are put in writing.

What Is the Problem With Gazumping?

In property sales, there are many checks, such as building surveys and legal checks, that must be completed before written contracts are drawn up. Unfortunately, this process can take as long as three months to be finalised after the initial verbal agreement.

What Is Gazundering?

Gazundering is when a buyer waits until a sale is almost complete to withdraw their current offer and replace it with a lower one.

Is Gazundering Legal?

Yes, as with gazumping, in England and Wales, the buyer is within their rights to retract or change their offer if there is no formal written contract.

What Is the Problem With Gazundering?

The risks associated with gazundering increase as the property deal progresses. The buyer might be inclined to accept a lower offer to avoid beginning the property sale again from scratch.

Navigating Gazumping and Gazundering

Property solicitors can help you navigate the property transaction and minimise the risks of gazumping or gazundering. To prevent gazumping, you could agree with the seller to take the property off the market while the checks and contracts are in process.

However, gazumping is more difficult to prevent if you do not have other buyers interested in the property. Sometimes, the lower offer is based on legitimate concerns regarding the property value, which a property solicitor can help you identify. The buyer then has the option to accept the new offer, put forward a counter-offer or refuse the offer. In some cases, the buyer will agree to the original offer if renegotiation is not successful. 

If gazumping and gazundering are real concerns for your sale, property solicitors can draw up an exclusivity agreement between both parties, which makes the verbal offer legally binding. Although this is an additional expense, it can minimise the risks of gazumping and gazundering or prevent the sale from falling through and having to start again.

Property Conveyancing

At PJE Solicitors, as property conveyancing experts, we understand the property market and the challenges surrounding property transactions. Our team of specialist property solicitors in Cardiff and Pontypridd are here to help you navigate buying or selling a house to ensure the process goes smoothly.

For more information about property conveyancing, head to our website or get in touch online.