What is 'gazundering'? Everything you need to know as the Government launches probe to simplify the house-buying process
The Government has announced it is looking to simplify the house-buying process.
It is calling for evidence from estate agents, solicitors and mortgage lenders over the next eight weeks in an attempt to make property purchasing "cheaper, faster and less stressful".
This includes launching a probe into 'Gazumping' - where people who have already put down an offer on a property are outbid by rival buyers.
But sellers also need to be aware of gazundering...
WHAT IS GAZUNDERING?
Gazundering is when a property buyer lowers their offer, just when contracts are about to be exchanged.
In England and Wales, even though an offer has been accepted, a house purchase is not legally binding until contracts have been exchanged.
Gazundering rarely happens in Scotland, because the agreement is binding earlier in the process - as soon as seller's solicitor provides a signed written acceptance of a buyer's offer, which may be 'subject to survey'.
WHEN DOES GAZUNDERING OCCUR?
In most cases gazundering happens because buyers know the seller is in a weaker position, because their property has been off the market during the sales process, so they seize the opportunity to save themselves several thousand pounds .
However, it may also happen in an uncertain property market - if house prices seem to be falling, for example.
Occasionally a buyer will have been gazumped and so will have no option but to gazunder.
About 25 per cent of house sales fall through after the offer has been made and before exchange - costing want-to-be buyers an estimated £1 billion in surveys and legal fees.
The exchange of contracts doesn't happen until all paperwork is in order: the survey has taken place, the mortgage arranged, searches conducted and legal documents completed.
This generally takes three months, depending on the number of people in the chain, how long it takes to have a survey done and how fast (or slow) the solicitor is.