Whether you’ve bought a house before or not, most people have heard the term ‘gazumping’ in one situation or another, but what is gazundering?
Gazundering is when a buyer unexpectedly lowers their offer just before contracts are due to be exchanged. This lesser-known but equally as frustrating term is highly criticised in the property world.
You’ll be happy to hear this crafty tactic of trying to secure a cheaper price last-minute can be avoided. Here’s how;
What is Gazundering?
Picture the scene. You’ve accepted a buyer’s offer, determined the terms of sale and you’re gearing up to exchange. Then, just before the sale becomes legally binding, the buyer lowers their previously agreed offer.
This practice is known as gazundering and it is sadly more common than you may think. Desperate not to lose the sale completely, sellers often feel forced to accept the lower price. In some cases, it can be significantly under market value.
Difference Between Gazumping and Gazundering
You may notice this is similar to the equally controversial gazumping, where sellers accept a higher offer last-minute.
Essentially, gazundering puts the shoe on the other foot, with the home buyer trying the underhand tactic by reducing their offer, leaving the seller between a rock and a hard place.
Gazumping tactics and gazundering tactics are frowned upon, however, this doesn’t stop them from happening. It’s always good to be aware of the terms and what you can do when selling your home.
Is it Legal?
Gazundering is legal; there’s nothing to stop a buyer changing their offer before contracts are exchanged.
In Scotland, both gazumping and gazundering are much less common, as buyers and sellers are entered into a legal agreement as soon as an offer is accepted.
Why Does it Happen?
There are a number of reasons why a buyer might ‘gazunder’.
Gazundering after Survey
Gazundering after a survey is one of the most common instances.
If a buyer lowered their offer after a property survey, it could mean the house survey has uncovered deal-breakers about the property’s condition and made the buyer doubt the sale or change their mind on the property.
This could be structural issues, for example. The cost of fixing these issues is carefully considered and the house price offer is adjusted accordingly to cover these fixes.
Issues in the Chain
Property chains can cause a number of issues for sellers are one of the main reasons why some sales fall through altogether.
If a buyer is relying on their house to be sold in order to buy yours, they may have no choice but to lower their offer last-minute. They might have been gazundered themselves, or they simply can’t find a buyer willing to pay more.
A sudden decrease in property value might cause a buyer to challenge the sale price and gazunder their initial house offer. This could be due to uncertainty in the housing market, for example.
Sometimes, unreasonable home buyers simply try and exploit weakness. They may lower their offer last-minute if they know the seller has been struggling to sell, or if the property has been on the market for a long time.
How to Stop Gazundering
There are some ways to help prevent this from happening to you. Here are some top tips on selling your home and how to stop gazundering:
Know your Property’s Value
Having a good idea of how much your home is worth will put you in a stronger position.
Some sellers feel forced to take a lower offer in the fear they won’t get another one. However, if you’re confident the price you’ve set is reasonable, it may help avoid this.
Set a Realistic Price
Make sure you don’t over-value your property. Look at how much similar properties in the area are selling for to provide you with a good base to work from. You should also figure out what makes yours unique.
Pick the Right Estate Agent
Choosing the right estate agent to seal the deal on a property purchase is key. They’ll be able to spot time-wasters more easily and provide advice to help you along the way.
Choose a Chain-Free Buyer
How to avoid issues with a property chain? Avoid the property chain altogether.
This can be easier said than done, however, it’s a good tactic. First-time buyers, for example, will be chain-free. Choosing your buyer carefully involves doing a bit of research into who they are and their position.
Remember: a higher offer might not always be the best. Many sellers chose to take a slightly lower one from someone who is chain-free to avoid potential problems.
The quicker the process moves along, the better. Delays can give a buyer more opportunity to try gazundering tactics.
This doesn’t mean rushing into an ill-advised sale. Rather, it’s important to make sure things don’t drag out unnecessarily.
Keep Communication Open
Try and be as transparent as possible. You should:
- Move quickly
- Keep in regular contact
- Make sure your solicitor keeps in touch with the buyer’s solicitor
- Build a relationship with the buyer
- Be upfront about any issues
- Set a completion date
Imply Other Interest
A good method for avoiding gazundering is to give the buyer the impression other people are interested in your property. If a buyer feels like you a relying on them, they may feel like they have the power position and could try to take advantage of this by lowering their offer.
Some home buyers will be wondering how to get a home seller to lower their price. Try not to give them anything that they can use as leverage.
Get the Timing Right
Avoid your property sitting on the market for a long time by picking your timings carefully. For example, Autumn tends to be a good time to sell.
Buyers can see how long your property has been up for sale – and might use this to their advantage.
Use a Property Exchange System
A property exchange system can reduce the time to completion by 50%. It will also secure the sale of your property with a legally binding agreement.
How to Deal with Gazundering if it Happens to Me?
Despite avoidance tactics, the worst can still happen. Here’s what to do next and how to deal with gazundering if it’s already happened:
If you feel the offer is unfair and significantly lower than your property’s value, you could try staying strong. It’s possible the buyer is just trying their luck and would still pay the higher price.
Consider the buyer’s position carefully. In some cases, chances are they won’t want to lose the money they’ve already spent on the sale.
It could be a risk, but standing strong and refusing the lower offer might just pay off.
There’s always the option to renegotiate on the property price. This could be in the case of an unfavourable survey, for example.
You could agree to meet in the middle, or include certain fixtures and fittings within the sale.
Seek Professional or Legal Advice
Ensure you have a solicitor you can trust every step of the way. They will be able to advise the best course of action for you if you have been gazundered, chances are they have faced cases of gazundering many times before.
Need help finding one?
Get a conveyancing quote for free here.