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How to minimize gazundering risk

Wednesday, October 15, 2008

Source: Catherine Deshayes

Buyers slashing their offer in the last minute before exchange of contracts, otherwise known as gazundering, and property chains falling through have widely been reported to be on the increase in today's volatile market...

To help avoid the stress and disappointment, Simply HIP reveals how sellers can reduce the chances of buyers gazundering them, and help hold a property chain together.

Set a realistic price - Seek the advice of a reputable and experienced estate agent to set a realistic asking price from the outset, and to advise whether an offer to buy is reasonable in the current market.

The chance of a buyer pulling out of a sale on a property that is out of line with the rest of the market is high in this current climate.

Avoid the delays - There is a greater chance that a buyer will pull out or gazunder if the exchange of contracts is delayed. Exchange Ready Packs, enhanced Home Information Packs (HIPs) that contain additional necessary information for conveyancers, ensures that the buyer's solicitor has everything needed right from the start of the process and can reduce conveyancing times from the current average of 80 days to as little as seven days.

Avoid last minute issues - Collect all the information the buyer will want to see upfront, such as guarantees on building works, or copies of planning permissions.

Be serious -Check whether the buyer is in a position to make a serious offer. Do they have a mortgage agreed in principal? A solicitor lined up? Ask for details.

Eliminate the problem - The best way to deal with a chain is to avoid it. A buyer with a mortgage in place is in a stronger position to avoid delays. Sellers might consider selling their homes and renting for a period to shorten a chain or keep it complete.

Use a reputable estate agent and HIP provider - Good estate agents are experienced in dealing with the pitfalls of the market and can help ensure a property chain holds together.

Use a reputable HIP Provider who is regulated by the Property Codes Compliance Board and adheres to the HIP Code. You do not want to waste time and money by having to take your property off the market if your HIP does not comply with the law.

Ashley King, Managing Director of Simply HIP, comments, "Unfortunately, chain breaks and gazundering have widely been reported to be on the increase in this difficult climate. Speed is of the essence in this climate, and offering as much information as possible from the outset will definitely help get to exchange of contracts as early as possible. By following our guidelines it may just help avoid any disappointment."

Source: Simply HIP