How to avoid gazumping, gazundering, and other derailments
According to one study, more than 300,000 property transactions collapse every year, at an average cost to the seller of £2,700 . If you’re keen to keep your transaction on track and avoid these unexpected costs, here are our tips.
What causes a transaction to fall through?
The top cause for a sale falling through is the buyer changing their mind or finding another home. Other causes include another sale falling through further up the chain, the buyer withdrawing based on survey results, or the buyer reducing their offer just before exchanging contracts (which is known as ‘gazundering’).
While these causes can’t be avoided entirely, there are steps you can take to reduce the likelihood.
How can you help to keep your transaction on course?
Here are five tips for keeping your transaction moving:
1. Choose the right buyer
Since many transactions fall through because of the buyer withdrawing or reducing their offer, or because of problems in the chain, many of these issues can be avoided by choosing the right buyer.
Instead of simply accepting the highest offer, prioritise chain-free buyers (such as first-time buyers) and those with evidence of their budget, in the form of a mortgage agreement in principle. Buyers without this may be offering more than they’re able to borrow, and so might suddenly reduce their offer based on a lender’s assessment.
2. Make yourself an attractive buyer
Equally, you should seek to fulfil your responsibilities as a buyer. Make sure that you’re clear on what your budget is and don’t make an offer that you’re not sure you can afford. It’s usually very quick and easy to get a mortgage agreement in principle, which many lenders offer immediately after you’ve completed a short online form.
If possible, you should sell before you buy. Your purchase is more likely to go ahead without problems if you can keep the chain moving.
3. Appoint a reputable solicitor
You should look for a solicitor at the same time as you start looking at properties, to make sure you can move quickly once you’ve found the home you want to buy. The registration process can take a little time, so try to get that out of the way early.
A good solicitor can help you to keep the conveyancing process on track and moving swiftly, so try to get a recommendation from a friend, or ask for client testimonials. ‘
4. Move quickly
The faster you can exchange contracts, the less opportunity there is for gazumping (when the seller accepts a higher offer) or gazundering, both of which can derail your transaction.
So, communicate regularly with your solicitor, return required paperwork quickly, and ask for clarification if you’re not sure what is needed from you at any point.
5. Consider a ‘pre-sale’ contract
Rather than waiting until you’ve exchanged contracts (the point at which a property transaction is legally binding and neither party may withdraw without a financial penalty), you can ask your solicitor to draw up a pre-sale contract that locks in both parties as soon as an offer is made. Bear in mind that this will come at an additional cost, and will also prevent you from backing out of the transaction.
All Rights Reserved. Information contained in this article and on our website does not constitute advice and is provided for information purposes only. Recipients should not act upon it, but should seek professional advice relevant to their own situation.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.