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What's the difference between gazumping and gazundering?

Troy Stevens 24 August 2022

You won’t hear the terms gazumping or gazundering outside of the property world. That’s because they have been coined to describe two specific occurrences that can happen when buying and selling houses.

Both gazumping and gazundering are controversial. Some people even think they should be made illegal. But what are they – and what can you do if it happens to you?

Let’s take a deep dive into the murky world of gazumping and gazundering to find out more.

What is gazumping?

Gazumping is the term given to when you've had an offer accepted on a property and entered an informal agreement that the property will be yours. Then, the seller accepts a higher offer before you've had the chance to exchange contracts.

Gazumping can happen at any stage after your offer's accepted but before the exchange of contracts has taken place.

What is gazundering?

Gazundering involves the buyer making an offer on a property, then, following the acceptance of their offer, reducing the offer amount.

To count as gazundering, this can happen at any time between the offer acceptance and the exchange of contracts stage. It’s most commonly seen just before the exchange of contracts, which leaves the seller with a difficult choice – accept the lower offer or take their property back to the market and start the selling process all over again.

What’s the difference between gazumping and gazundering?

The main difference between the two is that gazumping happens to the buyer, with the seller being the facilitator of the gazumping by accepting a higher offer in order to secure a better price for their home.

Gazundering, on the other hand, is brought about by the buyer. It’s not always a sly act – gazundering is an appropriate response to adverse results in home surveys or conveyancing searches – but it’s also frequently done by sneaky buyers to secure a lower price.

Why are gazumping and gazundering bad?

The main issue people have with the practices of gazumping and gazundering is that they cause the party on the receiving end to lose money.

This is because the first thing you’re supposed to do when you have an offer accepted on a house – or accept an offer on your house – is to instruct a conveyancing solicitor to handle the legal side of things. If you’re buying a house, you’ll also need to pay for a home survey and mortgage arrangement fees. The cost of this is usually into the thousands – money which can’t be claimed back if the sale falls through.

You can only instruct a conveyancing solicitor, surveyor, mortgage lender or agent for one property – you can’t later transfer their services onto a new property. So, if you’re gazumped or gazundered – this money is gone forever.

That’s not all – being gazumped or gazundered is seen as unethical, as you’re undercutting the other party in hopes of achieving a better outcome for yourself.

Not many of us would boast about gazumping or gazundering, but according to statistics from the HomeOwner’s Alliance (HOA), nearly 40% of buyers admitted they’d knowingly gazumped another buyer.

Gazumping and gazundering can be very frustrating, and both bring plenty of bad vibes between the buyer and the seller – not something anyone needs during the already-stressful process of moving house.

Those with Home Buyers or Home Sellers Protection Insurance in place are the only ones safe from losing out financially after falling victim to a gazump or a gazunder, as they can claim back the upfront fees associated with planning their move, including up to £1,650 in conveyancing fees.

Will it happen to me?

We can’t say for sure, but it could do. Statistically speaking, 1 in 4 house sales fall through in the UK – with gazumping or gazundering often the culprit. This likelihood indicates that it’s probably already happened to at least one person you know.

It’s been suggested that gazumping and gazundering are on the rise, too.

In fact, according to the HOA, gazumping is now the leading reason for a property sale falling through in England and Wales.

Why could this be? Well, consider that the cost of living is high, and people are looking to save money wherever they can. Property is such a huge expense, it makes sense that people are looking for the best possible deal, even if it includes breaking a verbal agreement. It’s nobody’s fault – tough times call for tough measures.

Is gazumping illegal? Is gazundering illegal?

This is a commonly-asked question. Some people firmly believe that the laws surrounding property contracts should be changed to prevent gazumping and gazundering once and for all.

In Scotland, both buyer and seller are legally bound to the transaction from the point of formal offer acceptance, so anyone buying property in Scotland is safe from both gazumping and gazundering. Similarly, the USA property market has measures in place protecting buyers from gazumping and gazundering, with transactions there involving the signing of a binding contract at the point of offer acceptance.

Despite this, both gazundering and gazumping remain legal in England for the foreseeable future.

What can be done about gazumping and gazundering?

There's little that you can do to prevent gazumping or gazundering from happening to you.

Here are some ways to help minimise your risk.

Help prevent gazumping

  • Try to bond with your sellers and show them you’re serious about your offer.
  • Notify them (through your agents if necessary) when you have instructed a conveyancer, letting them know when you can expect to be ready to exchange contracts.
  • Ask them to take their property off the market. They aren’t obliged to do this, of course.

Help prevent gazundering

  • After accepting their offer, make sure your seller knows you won’t budge an inch.
  • Tell your gazundering buyer that you’ve got several higher offers to fall back on – although this can be a risky tactic if, in reality, you haven't.

What to do if you’re gazumped or gazundered

If you’re not insured, there’s nothing you can do but kiss goodbye to your conveyancing fees, chalk it up to experience and move on.

If you’ve taken out Home Buyers Protection Insurance or Home Sellers Protection Insurance before offer acceptance, you’re protected from the financial losses that come with being gazumped or gazundered.

This is because you can claim back upfront costs associated with planning your move – including up to £1,650 in conveyancing fees – if something happens to derail the transaction that’s beyond your control.

Rhino Home Protect are market leaders in Home Buyers and Home Sellers Protection Insurance and can protect you against gazumping and gazundering from as little as £69.

Contact one of our friendly team to get your personalised quote or find out more.

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