If you're Canadian, chances are you've never been gazumped. It might sound like an obscure German sexual practice but no. Gazumping is a real estate term I'd never heard until last week when a client, newly arrived from the U.K. sprang it on me. First I blushed, then I asked her to explain.
In Quebec, a home seller who accepts a promise to purchase signs a legally binding contract. You can't just walk away because you've changed your mind. If the buyer fulfills the conditions spelled out in the promise to purchase within the specified deadline, it's a done deal.
Imagine my astonishment to learn that this is not the case in England, Wales and Australia, where sellers can change their minds right up until the very day of the closing.
By some crazy fluke of British law, a buyer's promise to purchase is not legally binding. It doesn't become binding until the seller hands over the keys and ownership documents, often 12 weeks after the original sale was signed.
I'm staggered to discover that sales routinely take three months to close in the U.K. In Quebec we can get a deal done in 30 days if all the documents are in order. I've had a few go through in as few at 21 days. Not in England, where the wearing of powdered wigs by lawyers and possibly real estate agents (note to self, check this fact) appears to slow things down substantially.
As a buyer, you can go through all the trouble and expense of a home inspection, financing and such only to get a last-minute call saying "Sorry old man, the owner has decided to accept another offer."
When you get that call, you've been gazumped and there's precious little you can do about it, short of throwing fistfuls of money (no Euros, please) at the vendor in the hopes he'll change his mind.
As you can imagine, there's plenty of gazumping during a hot real estate market.
When the market cools and buyers have the upper hand, reverse gazumping happens. That's when buyers can pull out at the last possible moment, or demand a price reduction. When that happens, it's called -- I kid you not -- gazundering.
Gazumping, gazundering. It all sounds like Anarchy in the U.K. to me.