Sales negotiations can be fierce when you’re buying or selling a property.
With so much money on the line, people sometimes use questionable tactics.
Gazundering is one of the most common examples.
Find out what this is below.
Gazundering: A Definition
Gazundering is when a house buyer reduces their offer at the last moment.
This typically happens right before the exchange of contracts. The sale isn’t binding yet, so the buyer can do this without breaking the law.
It is mainly used as a strategy to get a lower price. Some buyers plan to do this from the very beginning.
Gazundering puts the seller in a very difficult position.
They will either have to accept the lower offer or refuse and start the entire selling process again. If they reject the offer, they’ll have wasted money on fees.
And wasted time on a sale that hasn’t gone through.
The same is true for buyers who attempt to gazunder and have the lower off rejected. They will have to start house-hunting again.
They’ll have wasted time and money on estate agents costs and legal fees.
Gazundering can also cause a major problem if the property sale is part of a chain.
If the seller rejects the lower offer and has to start again, it could mean they are not able to buy a property they were planning on purchasing.
This could cause the sale to fall through. It may also affect other sales in the chain.
Gazunder’s reasons
They always planned to do it
Gazundering doesn’t always happen as a ‘last minute decision’.
It’s a ruthless strategy, but in such a competitive area, some buyers will always plan to gazunder, no matter what.
Their financial position has worsened
It’s possible that your buyer faces some difficulty. Maybe they’ve had to use some of their deposit savings for a last-minute emergency.
Or perhaps they’ve had a pay decrease at work, reducing the amount they can borrow.
If they can no longer afford their initial offer, gazundering could be their ‘Hail Mary’.
Better options have appeared on the market
It’s possible that your buyers feel like they haven’t got an excellent deal.
If similar houses appear on the market since you agreed to the deal, which are better valued, then they might have second thoughts. Gazundering could be a response to this.
They’ve been gazundered in their own property sale
When you’re in a property chain, you’re slightly vulnerable to the choices made by other people.
If your buyer is selling their house, and has just been gazundered, then this creates a knock-on effect. They no longer have the deposit needed to afford your property.
The legality of gazundering
Yes, gazundering is legal in the United Kingdom.
The sale is not legally binding until the contracts have been exchanged.
So, it’s legal for a buyer to change their offer any time up to this point.
How common is gazundering?
A recent survey found that 32% of house sellers in the UK have experienced gazundering. This means that around 1 in 3 buyers use it as a tactic.
You should keep your eyes out for signs that a buyer will gazunder.
If they keep complaining about the price, this is a warning. You can also read further below some more tips for avoiding gazundering buyers.
The ethics of gazundering
As a buyer, gazundering is completely legal. Yet, lots of people argue that it’s unethical.
Reducing your offer during the buying process is not uncommon. If a survey reveals a problem, for example, then this is a valid reason.
You should give your seller as much time as possible if you plan to reduce your offer. And you must always give a reason.
Trying to rush them into a last-minute decision is frowned upon. With so much money on the line, it could have an enormous impact on their livelihood and finances.
The effectiveness of gazundering
There’s no guarantee that gazundering will work. Many buyers will walk away and search for someone else.
Especially if their house is priced fairly, or it’s an active market.
Buyers take a risk when they gazunder. You could lose the chance to buy the house altogether. If you’re in a chain, this can have disastrous knock-on effects.
Tips to avoid gazundering as a seller
Price your property fairly
Many experts argue that you’re less likely to be gazundered when you price your house well. Buyers will feel satisfied with the deal they’re getting.
Trying to push your buyer higher and higher on price doesn’t always work. They can resent it, and look elsewhere. After all, many aim to offer below the asking price.
Thoroughly vet your buyers
The more you learn about your potential buyer, the better. It allows you to spot some warning signs.
And if you have multiple offers on your property, you shouldn’t necessarily go for the highest offer.
You should also aim to choose a buyer who has had a mortgage in principle secured.
This will mean that they’re more likely to get the mortgage to buy your property at their original offer. They won’t need to lower the offer if they can’t get the mortgage.
Find a chain-free buyer
If possible, choose a buyer who is not part of a property chain. They’re less likely to stop out. This is because their offer is dependent on another sale.
Don’t hide defects with your house
Your buyer will be dissatisfied if problems arise that you didn’t tell them about. It can create bad feeling and cause your house sale to collapse.
You should always be up-front about defects. Otherwise, if they find something out, gazundering might follow.
Move the sale along quickly
Try to be proactive when selling your house. Keep in regular contact with all your professionals.
If you move the sale quickly, your buyer will be more satisfied.
The speed isn’t always in your control.
For example, if you’re in a chain, you might not be able to speed everyone up. But make sure to take care of your side of things.
