Avoid being gazumped or gazundered
Greene & Co. provide a reservation fee service to protect both our buyers and our vendors from these traps.
A reservation fee is very similar to putting a holding deposit down when renting a property. It is a payment made by a buyer to provide exclusive rights to buy a property, under certain conditions and at an agreed price. The reservation fee is set at £2,000 for properties under £750,000 and for properties above it can increase.
Once the payment has been made, as the buyer you will have the security of complete exclusivity for 28 days and the property will be taken off the market. In this time the conveyancing can take place in preparation for the exchange. Following exchange the reservation fee is reimbursed in full.
As a vendor, you can be reassured that you have a committed buyer and are in a very secure position to move forward with an onward purchase and, where relevant, you are able to serve notice to your tenants. You will also have the benefit of knowing that the reservation fee will cover any of the costs that you might incur if the sale should not go through, although with the reservation fee this is much less likely.
It is better for everyone involved if a sale does go through, and reservation fees help ensure that this happens in just four weeks. Without a reservation fee, a large proportion of property sales fall through or do not complete. This figure is 33% as a nationwide average. Greene & Co. have been using reservation fees for two years and have seen fall-through rates reduce to just 2%.
We understand that there are some circumstances in which a sale should not go through. As the buyer you are free to leave the exchange if:
- Structural defects are found during surveys of the property
- There is a ‘defective legal title’
- Information gathered by the usual searches affects the value of the property.
For more information please refer to our downloadable ebooks.
An ebook we wrote to help make sense of the lingo used in the sales process is the Jargon Buster. Here's a brief snippet:
Gazumped – when a seller has accepted an offer, but then sells to another buyer who offers to pay a higher price.
Gazundered – when, just before exchange of contracts, a buyer suddenly lowers their offer price, in the hope that the seller will be forced to accept.
Conveyancing – the transfer of legal title of a property from one person to another.