LATEST TWEETS

Have you ever considered a cohabitation agreement? https://t.co/8jKj1i3RiE #partnership #cohabitation #lawyers… https://t.co/tDWFDlFo8z

Have you updated your will recently? #wills #solicitors #lawfirm #cornwall https://t.co/QHHCRoZVMy

There are many rights attached to properties, but now there might be the right to make noise: #property #lawyers… https://t.co/VZYYRxwA3E

A recent case has further exposed the complications around IHT planning: #lawyers #cornwall #tax #IHT… https://t.co/Q6AQmQtLb8

Gazundering, what it is and how to avoid it

A recent survey found over 40 per cent of all sellers are concerned about gazundering, a practice which tends to increase in a flat or falling property market.

Here Claire Wicks, a residential conveyancing expert with Parnalls Solicitors in Launceston, looks at this problem and offers some advice on how to ensure you sell your home at the agreed price.

What is gazundering?

Gazundering is when a buyer lowers their offer price just before exchange of contracts. As the seller, you are likely to be fully committed to the transaction. You will have already incurred costs, particularly if you also have a linked purchase. Having taken your property off the market, if you lose this buyer, you may feel you will be back to square one.

Sometimes a buyer may have a good reason for making a last-minute price reduction. For example, he may only just have received a survey that reveals a serious defect, or he may be trying to pass on a price reduction from further down the chain.

Often though, he may simply be taking advantage of the situation, relying on you not wanting the sale to fall through. His actions may be unscrupulous, but, unfortunately, they are completely legal.

Government proposals to stop gazundering

Until exchange of contracts, there is no binding sale agreement in place and either party may pull out. Estimates suggest one in three house purchases fall through, resulting in £270 million in wasted costs every year.

The government is looking at ways to reduce this and is considering the introduction of reservation agreements. The detail is not yet clear. However, it is likely that both buyer and seller would pay a reservation deposit, in the region of £1,000, on accepting an offer. If one of them pulls out for no good reason before exchange of contracts, that party would lose their deposit.

Although the government is trialling a pilot scheme, there is no firm plan for the introduction of reservation agreements yet. Fortunately, though, there are already some steps you can take to reduce the risk of gazundering.

Consider a lock out agreement

Lock out agreements are like the proposed reservation agreements. However, they are not yet common and the buyer and seller, or their advisors, must agree the terms themselves.

A lock out agreement allows your buyer an exclusive period in which to buy your home at the agreed price. However, it can also require him to compensate you if he pulls out for no good reason.

Agreeing what is a good reason for pulling out can be contentious and prolong the time it takes to reach exchange of contracts. A lock out agreement may not always be suitable but it can give you an extra level of security, particularly if you stand to lose out significantly by taking your home off the market.

Check out your buyer

Your estate agent should check your buyer’s credentials and his proceedability. A good agent should also know when a buyer is chancing his luck, and the best way to approach issues which arise during the sale process. So, choose your agent wisely.

If you are in the envious position of choosing between would be buyers, consider favouring those who are chain free, especially a genuine cash buyer. They are more likely to be able to move quickly and to have fewer issues, such as funding, that could cause problems later.

Sort out issues in advance

Remove any excuses your buyer could use for reducing the price. If you know there is something wrong with your property, either remedy it before putting your home on the market or be upfront about it. This can reduce the risk of him trying to negotiate the price down when a survey reveals the problem or, worse, using it as leverage for a reduction closer to exchange.

It is not just physical defects that can derail the sale. A buyer may also seize on legal issues to justify a price reduction, such as a home extension which does not have the right permissions or a parcel of land without good title. Discuss your plans with your solicitor before you put your home on the market and deal with any legal issues in advance. This will boost your chances of a smooth sale, at the agreed price.

Choose the right solicitor

Find a solicitor who is an experienced conveyancing professional, who will give you close personal attention. Proactively managing the legal aspects of your transaction will minimise the risk of delay. Keeping the parties well informed will avoid misunderstandings, which can easily derail a transaction. So, make sure your solicitor is also a good communicator.

The right solicitor will help keep your sale on track, at the agreed price.

For further information about buying or selling your home, please contact Claire Wicks in the Residential team on 01566 772375 or email wicksc@parnalls.com.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

MORE NEWS

Should I get a cohabitation agreement?

The Need for Updating Wills

The Right to Make Noise

Ill-health pension transfer not liable for IHT

Legal Time Limits - why so important?

Would you pay a premium for a south-facing garden?

Video-witnessed wills to be made legal

New Planning Relaxation Is Not the Whole Storey

How to minimise delays in obtaining Grant of Probate

Could you benefit from the Green Homes Grant?

A SHOCK TO THE SYSTEM: new electrical safety regulations for residential tenancies

Property of Cornish residents who die without a will goes to Prince Charles

Does your lawyer progress your accident claim efficiently and provide you with a personal and professional service? Can i change solicitors for my accident claim?

What effect could the new changes to stamp duty have on property sales?

Preparing to sell your Launceston property

Staying safer in video meetings

Making Sure Your Great New Home Comes With Clean Air

Property Market Re-Opens in England

Coronavirus: Wills and Powers of Attorney FAQ

Medical Care Received Not Up to Scratch?

Had an Accident in Someone's Home?

Accident or Injury Involving a Dog?

Social Distancing No Obstacle for Parnall's Mobile Document Signing Team

Coronavirus (COVID-19) and Commercial Property Legal FAQs

Rent Charge Suspensions: Protecting Your Interests

Been Asked to Sign an Employment Settlement Agreement? Seek Advice Urgently...

Services Update: Continuity of Legal Service Provision

Advising You in Uncertain Times

Coronavirus Update

Could carelessness on social media land you in court?

Is an electronic signature on a commercial property document acceptable?

What happens when there is no health & care LPA in place

Social Media Training for Businesses

Information to gather for your probate solicitor