This facility is called the "Reservation Fee Service". This is put in place to hopefully Help Protect both our Buyers and our Vendors from being gazumped or gazundered.
Gazumping - When a seller has accepted an offer, but then sells to another buyer who offers to pay a higher price.
Gazundering - When, just before an exchange of contracts, a buyer suddenly lowers/chips their offer price, in the hope that the seller will be forced to accept. We consider these methods, which are unfortunately still used in the industry, unethical and a waste of time. They can also be a detriment to both parties involved. Often the person who gazumps the original buyer feels they are paying too much and leaves the deal. Likewise when a seller is gazundered the transaction can turn sour and become less straightforward for the buyer.
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 will increase accordingly.
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 the exchange of contracts, 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.
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: