Gazumping and Gazundering
Although not a a phenomenon in Northern Nevada or Nevada Real Estate ... Gazumping and Gazundering have long been problematic practices in other countries, particularly in England and Ireland, but overzealous Buyers and Sellers are starting it here, and it is good to know it for what it is. Gazumping is when a Seller raises the price of a property, or accepts another higher offer at the end of what we would call the escrow process here in the States, right when it is time to close. The word means to swindle and is thought to be Yiddish in origin. Gazundering is the opposite of Gazumping, and is simply a play on Gazumping. Gazundering is when a Buyer waits until the very end and then offers a lower price while refusing to close.
The practice is prevalent in the United Kingdom because they make oral agreements in their real estate transactions that aren't reduced to writing until the end of the "escrow" period. Without a written agreement, both sides are open to be Gazumped or Gazundered. In the United States we typically submit a written offer with many terms and conditions which ties all parties to the transaction. Or does it? Most contracts have contingencies of one sort or another. They can include physical inspections for the Buyer, or a Seller having the right to find a replacement property. Either way, the self-protective contingencies provide an opportunity for the less scrupulous individuals to capitalize on the "out" provided for in the contingency with an attempt to Gazump or Gazunder, depending on which party is seeking advantage.
We aren't talking about renegotiation resulting from new information or circumstances such as a major unknown repair discovered in the physical inspection. Rather, these practices prey on the fact that time has run out of the transaction and the other party has made decisions and commitments based on your transaction. That is what makes the practice particularly distasteful. You make a commitment to the other party to which they reciprocate - you have a meeting of the minds. The transaction moves forward and the parties make additional commitments based on the initial commitment. These can include hiring moving companies, buying a new home, etc. When one takes advantage of the other party because they trusted you to honor your word, there seems to be something morally and ethically awry here, in our opinion. It is morally reprehensible.
Our advice: It is important to negotiate to the best of your ability and position to advance your cause. Negotiating is a very important part of the real estate process. Many Americans are loathe to negotiate, which is unfortunate as they often end up not getting the deal they could have achieved, or sometimes even getting a deal because of their distaste for negotiating. Don't hesitate to negotiate to improve your position, but when you have achieved a meeting of the minds and nothing of substance arises later ... live with what you did. If you don't, and you are tempted to Gazump or Gazunder somebody remember the Law of Reciprocity is always in play... you reap what you sow. Do the right thing ... make the best deal and enjoy the results of your efforts. Agents have responsibility here as well. They may claim that they were acting on instructions of their client, but often those instructions are given after the agent has given the background advice on which the instructions were made. There is no right way to do the wrong thing. Just remember to establish the difference between Gazumping and negotiating, and don't "play out of bounds".
Be careful in a Short Sale as some of the Short Sale Addendums have a clause that would allow the Seller, or the Seller's lender to Gazump you. Read what you sign and live with your agreement. Leave the Gazumping and Gazundering to the Gaschnooks!
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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.com