Gazundering is the slightly dubious practice of a prospective buyer putting an offer on a property which the seller accepts, and then swooping in with a lower offer just before completion. The buyer is relying upon the seller being obviously keen to sell and not wanting to re-market their home all over again.
For example, the buyer presents an offer of 150,000 on a house which the owner agrees with, only for the buyer to then gazunder them by offering 120,000 just before final contracts are exchanged. In the current state of the market, it now seems that gazundering is on the rise.There is not any acceptable justification for this reduced offer. It hasn’t been made because a survey team found any new problem with the building. This is a somewhat devious tactic that the buyer is applying to save themselves some money through relying on the vendor’s insecurities.
As we can see at the moment, gazundering is most likely to occur when the market is experiencing difficulties. Building societies and banks are increasingly less able to supply mortgages as property prices drop in many areas, and the consequences of the credit crunch become very real. Buyers are finding it harder than ever to get the funds together, and so they try to reduce their spending – even if it means doing this in a very underhand way. If a gazunder offer is rejected by the seller, the chain can collapse and leave many parties back at square one.
But how do you avoid being gazundered?
Have your property realistically valued and then set a genuine, acceptable price. If your home is over-valued, that might well be the excuse that buyer needs to gazunder. Their defence is that greedy homeowners that are fuelling an over-inflated property market deserve to receive less money than they anticipated, so don’t give them the reason they need by offering your property at a price that reflects a true and fair value.
Think about making it a stipulation of the sale that buyers must pay a deposit and agree to a contract that ties them into completing the sale at the agreed amount, with a deposit put into a solicitor’s account and a deadline set for the final exchange of contracts. Paying a deposit is a fairly regular practice overseas and the deposit is lost is the buyer aborts without a valid reason.
Finally, it never hurts to be on friendly terms with a buyer. If the buyer can see that the vendor is a person that would be hurt by such actions, their conscience might stop them from attempting to gazunder.
If you are stuck with a gazunder offer, there is still hope. You can reject the offer, even on principle, and it is possible that the buyer will still return to the original offer – after all, they have put their time, money and effort into securing the property, and it is possible that they have even developed an affection for the property – not to mention organising a sale on their current home. At the very least, you may be able to reopen talks and reach an understanding.
Watch Out!
For some more advice, why not speak to a conveyancing solicitor today.
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