Gazundering – what it means and how to avoid it
It’s an odd sounding word, and you’re likely to only hear it when you buy property, but what is gazundering? You might have heard of a similar term, gazumping: that’s when someone who has already accepted an offer on their property, takes a better one from someone else before the contracts are exchanged.
Gazundering is when a buyer lowers their offer at the last minute, just before contracts are exchanged. It puts sellers in a terrible position, they could lose their buyer, the chain could collapse, and they will likely have to start all over again. You can see why they often feel forced to accept.
Is gazundering legal?
Gazundering is completely legal, even if it doesn’t feel like it should be. There’s nothing stopping a buyer from dropping their offer before contracts are exchanged.
There are a few reasons it can happen. The first, which is possibly the most reasonable is if the buyer gets information about the property that will reduce its value. This could be something that comes up on a survey, or a drastic drop in the property market. In this case it can be understandable that there is a concern over price.
However, buyers can gazunder their seller because they know the seller is has taken the property off the market and they’re in a chain themselves, so they take advantage and try and save money.
Other reasons include the rare cases where a buyer’s mortgage offer expires and they are unable to achieve a new rate that will allow them to afford the property, and the collapse of a chain. If the buyer was in a chain, and it collapses, the buyer may be gazundered themselves, then not able to afford your property at the original price.
How can I avoid gazundering happening to me?
Avoiding gazundering is tricky. If a buyer offers you a lower price, you can refuse it, but as we have mentioned, this can have impact on chains etc. so what else can you do?
Choose a chain free buyer
While we do not advise turning away buyers just because they’re in a chain, if you’re in the fortunate position of having a few offers, go with those who are chain-free. They’re more likely to move quickly and there is less chance they will have additional costs or affordability issues further down the process.
Set a date for exchange
Get a date in place for exchanging contracts as soon as possible. It keeps everyone involved focused on an end goal and applies pressure for everything to happen in a timely fashion.
Keep in touch
Keep in regular contact with your solicitor and make sure your case is being handled as quickly as possible. Have your agent stay in touch with the buyer’s solicitor too, to make sure things are moving smoothly from that side. Agents and solicitors typically prefer the buyer and seller not to have contact, but if you can stay in contact with them and build a relationship with them, they’re less likely to try something underhand like gazundering.
Be realistic about your price
Have your property valued and do not over-inflate the price. If you set it above what it should be, there is much more chance of a buyer lowering their offer, especially if a survey reveals any issues. A buyer may initially offer asking price to secure the sale, then take time to think and offer lower, but if your initial price was fair you have more of a case for sticking to your guns.
Get a good agent
A good agent will know how to handle buyers who are attempting to gazunder for no good reason. Work with an agent you trust to get you through the moving process stress-free. See our guide to choosing the right agent.
Don’t try to hide anything
You must be completely transparent about any problems with the property or the surrounding area. A survey will bring up these issues anyway, plus most savvy buyers will do research of their own. Don’t give buyers a reason to make a lower offer.
Do the maths
Even after offer has been accepted, if you’re in a chain and you know you need to move, work out what the lowest offer you could accept will be. This will prepare you if the buyer does reduce their offer because you will know immediately if you can afford to accept it and still move.
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