What Is Gazundering?

Gazundering is a term derived from “gazumping” (a seller accepting another offer after having sold the property) and it refers to when a buyer lowers their offer just before the exchange of contracts in a property sale. This reduction is unexpected and can be the result of a buyer responding to market changes or property surveys, but it can leave sellers in a challenging position, often feeling pressured to accept the lower offer, due to concern that the sale will fall through. In this article, we delve into gazundering, its prevalence, legality, fairness, and strategies to manage or prevent it.

What is Gazundering?

Gazundering occurs when a buyer, after initially agreeing on a purchase price, lowers their offer before the sale completes. This can happen at various stages but typically takes place just before the exchange of contracts.

How Common is Gazundering?

While not the norm, gazundering is not unheard of and its frequency may be influenced by changes in market conditions, a drop in buyer confidence, changes in the personal circumstances of the buyer and other external factors impacting property values.

Is Gazundering Legal?

In the UK, where property transactions often involve a chain of buyers and sellers, gazundering is legal. Until contracts are exchanged, while it is not completely ethical, either party can alter the agreed-upon terms and even pull out of the sale or purchase completely.

Is Gazundering Fair?

While legal, gazundering is widely considered unfair and can strain the trust between buyers and sellers. Sellers may have already invested time and money based on the agreed-upon price, making a last-minute reduction feel unjust and like the buyer is just trying to save some money at the last minute. However, in certain circumstances, it may be the only option for the buyer. For example. If market conditions have drastically changed or, if they have sold their own property to fund the purchase and their own buyer has reduced their offer.

How to Deal with Gazundering

• Open Communication: Maintain open and honest communication with your conveyancer, the estate agent and even the buyer to understand their reasons for the reduced offer.
• Negotiation: If feasible, negotiate a compromise that satisfies both parties and allows the transaction to be finalised.
• Market Analysis: Provide evidence of current market conditions to support your asking price and be able to negotiate fairly with the buyer.

How to Prevent Gazundering

• Choose a good estate agent: An experienced estate agent should have dealt with gazundering before and will be able to handle the situation for you, assisting with negotiations.
• Secure Agreements in Principle: Ensure potential buyers have their finances in order and provide agreements in principle.
• Don’t price too high: Buyers may feel like they have to pay the asking price for a property they love, then get cold feet. Pricing your property too high increases the risk of this occurring. 
• Swift Progress: Aim for a quick and efficient transaction to minimize the window for market fluctuations. Set exchange dates as quickly as possible and consider selecting a buyer who is chain-free buyer, who is less likely to experience their own price reductions.
• Transparent Communication: Build trust by maintaining clear and transparent communication throughout the process. Don’t hide any information about any issues with the property that may come back on a survey and maintain regular contact with your conveyancer and ensure they keep you updated, to avoid unnecessary delays.

Conclusion:

While legal, gazundering introduces ethical considerations, sellers and buyers alike should approach these situations with open communication, understanding, and a willingness to negotiate fairly, to ensure a fair and successful transaction for all parties.