Ghost gazumping is the new hot phrase in London property or so I am told. It appeared in an article in The Financial Times recently and has led me to some rather feeble gags about haunted houses. But what is it and should you be worried.
The phenomenon is nothing actually new. Ghost gazumping is merely a term a journalist has given to a situation where the price and terms of a property transaction have been agreed, but the seller demands a higher price just before the exchange of contracts. This tends to happen when prices are rising quickly and is not unique to property. It happens in all types of negotiations be they business or personal.
Having terms of an agreement changed at the last moment can be extremely aggravating. So how should you deal with it?
- Take a deep breath- do not respond immediately by telling the seller to take a running jump. Neither should you flap hopelessly and simply agree to their demands. This is critical. It is very easy to let you emotions take over at this point.
- Irrespective of how annoyed or worried you might be, study the seller’s proposal. Does the purchase still work for you at the proposed price? Also take into consideration what you know about the market. How many other buyers are there? What represents fair value? Is the property worth more or less to you than this figure? Would it be to your advantage to withdraw your offer and come back at a lower price later?
- Counter-offer. You can either stick to your original terms and call their bluff. Offer more (and in some cases less). Or agree to their terms but ask for something extra to be included. Also insist on exchange of contracts within 24 hours (check that this is possible with your solicitor first).
What inexperienced negotiators forget is that the negotiation does not end until everyone has signed on the dotted line. This is why communication is so important even after terms have initially been agreed.
It also highlights why I emphasise the importance of being in a position to exchange quickly, i.e. being organised before you even find your ideal property. The shorter the delay between agreeing terms and exchanging contacts, the less likely you are to suffer “ghost gazumping” or even a simple change of heart by the sellers.
On that note, if you would like to discover more about negotiation strategies or want expert advice on buying property in prime central London, you can request an hours free consultation.