A senior estate agency figure has questioned whether there is any answer to gazumping and gazundering, saying that buyers find it easy to find the ‘wriggle room’ to get out of deals.
Trevor Abrahmsohm, of Glentree in London, said that from time immemorial, both gazumping and gazundering have been the “scourge of the property market”.
He said of the latest Call for Evidence into home buying and selling: “The problem lies in the protracted time taken between agreement of terms, the obtaining of a mortgage offer and a structural survey which leads to the consolidation, by way of an exchange of binding contracts, where a non-refundable deposit is paid.
“Both the USA and Scotland claim to have the perfect solution whereby, supposedly, you can exchange an immediate contract for purchase, pay a deposit, and this is designed to deny the opportunity of either buyer or seller reneging from the agreement. This system looks ideal save for the fact, that the devil is in the detail, i.e. they are subject to mortgage finance and structural survey and therein lies the difficulty.
“As a seasoned veteran in the UK residential property market for the last 40 years I know all the tricks of the trade.
“I can tell you that even with these quickie exchanges a canny purchaser can wriggle out of these agreements if they want to.
“By way of illustration, all the purchaser needs to do is to is to deliberately frustrate their own ability to obtain a mortgage or overstate the surveyor’s concerns about the structure or services of a property and Bob’s your uncle you have ‘wriggle’ room to renege.
“This is a little lop sided’ since it is more difficult for the seller to get out of the contract than the buyer which, you could say, seems inequitable.”
Abrahmsohn went on: “There is no perfect solution here but a half way houseversion could be that the buyer and sellers solicitors agree to exchange an immediate ‘lock out’ agreement which gives the buyer time to organise their survey and obtain mortgage finance whilst the terms are fixed under this agreement.
“This, technically, could be signed within hours or days of an agreement in principal and is designed to prevent the parties being able to renege from the agreement. Unless a non-returnable deposit is lodged by the purchaser they could still prevaricate if they found a cheaper property elsewhere and thereby undermine the agreement if they wanted, so nothing is perfect.”
Abrahmsohn pointed out that gazumping is a feature of a rising or bull market, whereas gazundering is a feature of the opposite.
He said: “In my travels I have known a seller who had previously ‘given his word’ to sell a property to a buyer and then ‘bought his word back’ for a sum of money (with the purchaser’s agreement) in order to sell to another buyer at a better price. All three parties were delighted with the result and this is what we call ethical gazumping, which is far more morally fragrant.
“In the absence of this simple measure, I’m afraid that in bull markets gazumping will be rife and in bear markets so will gazundering. So life goes on!”
In Abrahmsohn’s equally, and decidedly, un-PC views on the Green Belt, he described this as a stranglehold preventing the annual delivery of new homes.
He said ecologists are clinging on to the Green Belt for ‘dear life’, and criticised local petty politics and Nymbism. Abrahmsohn added: “Permitted Development Rights, which enables office buildings to be converted into residential, were an act of genius and we need more quick fixes’like this to shake up the system.”