What is gazundering?
Gazundering is what every seller dreads. It's when you’ve got a buyer ready to buy your property then, bam, they slash their offer at the eleventh hour. Often asking for thousands of pounds off of the asking price.
When does gazundering typically happen?
Gazundering usually happens before the point of exchange, when a sale becomes legally binding.
In around two-thirds of cases, gazundering happens more than two weeks in advance of this date, but in the remaining third, it takes place in the fortnight leading up to exchange, according to Open Property Group.
Why do sellers accept lower offers?
Some three-quarters of sellers usually end up accepting the reduced price of their home, because they don't want to jeopardize the purchase of their next home.
Other reasons sellers agree to a reduced offer include:
they didn’t want to go through the whole selling process from scratch again
they still thought the lower offer was fair
they had to move quickly
they wanted to sell to that particular buyer
they had already racked up costs associated with the sale.
However around a fifth of gazundered sellers will reject the lower offers, leading to the sales collapsing.
Is gazundering legal?
Yes, it is completely legal. It's only after contracts are exchanged that the buyer is bound to go through with the sale. If the buyer pulls out after the point of exchange, they'll lose the 10% of the purchase price that they handed over to the solicitor when the contracts were exchanged.
Jason Harris-Cohen, CEO of Open Property Group, explains: 'Gazundering can be a very stressful occurrence for sellers and unfortunately, as there’s no legal requirement to proceed with a purchase until the exchange of contracts, there’s not a great deal you can do. It leaves many sellers with little choice but to accept the lower offer.'
Why are sellers being gazundered?
The number one reason buyers usually lower their offer is because of issues revealed in a property survey.
Another reason can be that a down valuation occurred from the mortgage lender on the property.
But it's also possible that the buyer is simply 'chancing their arm'.
Harris-Cohen says that gazundering is 'certainly more prevalent in cooler market conditions,' when homes are harder to sell.
What can you do to avoid being gazundered?
You can’t stop buyers from gazundering. But there are steps you can take to help reduce the chances of it happening.
Set a realistic asking price: Use our tools to research your local housing market and get a feel for what a realistic asking price is.
Get a range of valuations for your home before you put it on the market. 'Today’s buyers are well-informed about the market and they will have an idea if you have overpriced your property, leaving you more vulnerable to gazundering later in their transaction timeline,' says Harris-Cohen.
Be transparent: Yes, that means being open about any issues with your property. You don't want your buyer to find problems further down the line and use them as a tool to reduce the agreed price. 'Survey issues are the most common motivation for gazundering and so there’s no point in attempting to hide a problem with your property as it will eventually come to light,' explains Harris-Cohen.
Hire an experienced selling agent: Get a good estate agent on your side to negotiate the sale effectively and help keep it on track. And outline your expectations with the agent and potential buyers at the outset. They should be in no doubt that you will not accept any price reductions.
Choose a good buyer: Focus on finding a ‘proceedable’ buyer as well as a good offer. 'The best course of action is to find a chain-free buyer if you can, as they are more willing to move quickly. They are also less likely to be caught out by additional costs further down the line, or to be subject to other affordability issues,' says Harris-Cohen. 'First-time buyers in particular are also less likely to potentially jeopardise their purchase as they are keen to get that first foot on the ladder.'
Establish a good channel of communication: Communication is king! Make sure the sale progresses quickly and that everyone is on the same page. 'When you do find a buyer, maintain a good channel of communication and be upfront and honest about your property,' says Harris-Cohen.
Put yourself in a strong position to say ‘no’: This could mean renting your next home so you don’t have the pressure of managing a sale and a purchase at the same time.
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