The real meaning of two emotive words
In the property market, there are very few words more threatening to a buyer or devastating to a seller than Gazumping and Gazundering. So what exactly are the “real world” definitions of these two emotive words?
Gazumping is a situation that occurs when a seller accepts a higher offer from a new buyer, having previously agreed to sell to someone else. The new buyer may offer substantially more, a fact that might persuade a seller to renege on the first deal. In a perfect world the seller, through his agent, will go back to the first buyer and explain what has happened and suggest that they increase their offer to an acceptable amount. Naturally, this has the effect of causing anger and disappointment in equal measure and the relationship is never quite the same again. Many sellers just say no, to their credit, others may take full advantage of the higher offer without compunction and leave the original buyer with nothing.
Gazundering is actually more easily explained and in many ways is much worse because it is used to reduce an offer late in the proceedings, often just before exchange of contracts. The seller is then faced with a difficult decision. Does he take the lower offer and complete the transaction or does he tell the buyer to go to the proverbial place? This too will sour the relationship even if there is a compromise figure agreed. Remember this is not a simple re negotiation after a survey etc., this is a cold blooded attempt to buy the property for less at the eleventh hour. Not nice! Don’t confuse gazundering with genuine re negotiation between the parties.
Fortunately, the latter does not happen too often. In our experience, most buyers are fair and reasonable and probably would not have the gall to do it. It could also create havoc with their sale, if there is one. Cash buyers are more likely to be the culprits. Gazumping on the other hand is more common, particularly in a booming market and is brought about by a mixture of panic on the part of a buyer and greed on the part of a seller. However, it is probably not a feature of everyday life in a modern estate agents office. Thankfully!
So what is the estate agent’s position? Agents are obliged to act upon instructions received from their client. They can advise, but cannot make the decision. The Code of Practice and the rules of the Profession state that all offers MUST be submitted to the seller (the agent’s client). If an offer is received for a property that is already sold, subject to contract, even if it is actually off the market, the agent must submit it. He may advise against taking it to avoid compromising the sale, but it is the seller’s decision. You can easily see how the original buyer might blame the agent if another offer is accepted. Conversely, a seller would have every right to be angry if he found out later that a higher offer was withheld by the agent. The agent could end up in court. Fortunately there are rules in place that protect the public and the agent from these unsavoury actions. Money is a potent weapon, but we like to think that morality and common sense will prevail. There will always be the chancers, speculators and the bucket shop agents, but most of the buying and selling public prefer to act in a decent way and that is to be applauded.
Martyn R Cox & Co do not like or encourage gazumping, but we are obliged to achieve the best price for our clients, which is not the same. As for gazundering in its true sense, it is a despicable practice and we often advise our clients to stand firm on the rare occasions it occurs. All transactions and situations are different. Martyn R Cox & Co operate under the Code of Practice and Conduct laid down by the National Association of Estate Agents and Ombudsman scheme for Estate Agents.