Gazundering – What Is It and How to Avoid It?

Whether you’re buying or selling a house, chances are you’ve heard of the term ‘gazumping’ at some stage. But have you heard of its antonym, gazundering?

9th February, 2022

Whether you’re buying or selling a house, chances are you’ve heard of the term ‘gazumping’ at some stage. But have you heard of its antonym, gazundering? Whereas gazumping is something that buyers have to watch out for, gazundering is something that can negatively impact you when you’re selling a house. In this article we’ll walk through everything that you need to know about gazundering. We’ll explain what it is, how it differs from gazumping. We’ll also discuss its legality and whether or not gazundering can ever be fair. Finally we’ll talk about why gazundering happens in the first place, and what steps you can take to avoid gazundering when you’re selling your house.

Looking for some specific information about gazundering after a survey? Or how property chains can increase the likelihood of being gazundered? Use the menu below to navigate through the article more easily. Or, you can read on for our entire guide!

 

What is Gazundering? 

Gazundering takes place when a buyer reduces their offer at the last minute. Usually just before contracts are exchanged and the sale of the property is legally binding. So much has been invested into the property sale at this point, selling a property is costly, and can take a long time

You can imagine the frustration that vendors feel when the offer is reduced at the last minute. At this point the seller of the house or flat really has two options, either accept the reduced offer and continue with the purchase, or refuse it and potentially go back to square one in the selling process. Many vendors understandably feel pressured into accepting the offer once they’ve got to this point. 

 

How common is Gazundering? 

The HomeOwners Alliance conducted a study that surveyed 2,000 people about the practice of gazundering. It revealed that sellers were becoming increasingly concerned about it. 45 percent of respondents revealed that they were worried about gazundering. This was particularly prominent in the South West, London, and the West Midlands. In these regions just over half of property sellers were worried about gazundering. 

 

What is the difference between Gazumping and Gazundering? 

As mentioned before, gazumping is where a property seller accepts an offer or bid from a second buyer that is more attractive (either in terms of price or position) than the offer that they initially accepted. This primarily affects the buyer of the property. It leaves them in a position where they have to either increase their offer or sell their position by completing more quickly on the transaction. 

 

Gazundering is the opposite of Gazumping

 

Gazundering is the opposite of gazumping in the sense that the buyer is the one calling the shots. The property buyer reduces the offer at the last minute and then leaves the property seller in the position where they can go and try and find other offers for the property, or they accept the reduced offer. 

 

Is Gazundering legal? 

If you live in England or Wales then (unfortunately if you’re a property seller) gazundering is completely legal. No property sale is legally binding until the moment that contracts are exchanged between the buyer and seller. 

Gazundering is far less likely to happen if you live in Scotland. In Scotland a sale becomes legally binding once an offer has been accepted. So if the buyer backs out by reducing their offer then they lose their deposit. It is possible to back out of a sale in Scotland if serious issues become clear after the contract has been entered into. But Home Reports are conducted on Scottish properties before they’re listed. So the likelihood of this happening is low. 

Whilst the legal status of gazundering is straightforward, its morality is less clear cut. Now we’ll discuss whether gazundering can ever be fair to a property seller. 

 

Is Gazundering fair? 

The answer to this question really depends on the situation. Because gazundering is often associated with opportunistic buyers who want to exploit a seller in a vulnerable situation, the gut reaction may be to assume that it’s always unfair. Certainly if the buyer is purely looking to exploit the seller’s weak situation then it could be argued that gazundering is indeed unfair. Sellers will always want to avoid this kind of gazundering. 

 

Gazundering isn't always fair

 

On the other hand, if the prospective buyer reduces their offer in response to issues that emerge in the survey, such as subsidence, then it could be argued that this is fair. Issues that are surfaced in surveys usually result in a cost to the buyer as they will be the one who has to fix them. So the buyer reducing the offer to reflect that additional spend is understandable. 

We can’t be the moral authority on gazundering, but it’s definitely more understandable in some situations than others. 

 

Why does Gazundering happen? 

Gazundering can happen for many reasons. We’ve listed and explained some of the most common ones here. 

The buyer over-offers 

If the buyer has seen a property that’s their dream home then it’s not uncommon for them to make an offer that they later regret. They could do this because they weren’t thinking clearly at the time. Or they could make a high offer in order to get the property taken off the market and secure it, all the while having the intention of reducing the price. 

When it gets closer to the exchange of contracts the buyer might get cold feet and start to regret their offer. This is where they may gazunder to feel like they are getting a fairer price than they initially offered. 

Survey results

Surveys are typically conducted as part of the conveyancing process to assess the condition of the property and surface any issues that may affect its value. There are different types of surveys that give different levels of detail about the property’s condition. The most thorough survey you can get is called a structural survey, which will give an in-depth report of the structural integrity of the building. 

 

Gazundering can happen as the result of a survey

 

If the buyer has a survey carried out and it surfaces issues that will give rise to significant costs in the future they may reduce their offer or negotiate based on these costs.

Property chain collapses 

If the buyer is involved in a property chain (i.e. they’re buying and selling a property at the same time) and the chain collapses, it can create problems. If the sale of their property falls through or is held up, it might impact their mortgage offer. In turn, this could affect their offer on your property and lead to gazundering. 

Property market conditions

No individual can control the housing market. Sales can take months to go through. If the housing market takes a dramatic downturn during the period between offer and exchange then the buyer may have no choice but to reduce their original offer. Otherwise they could end up in negative equity with their mortgage from the outset. 

The mortgage offer expires 

Mortgage offers are typically valid for around 6 months. If the sale takes a long time to progress from being under offer to exchanging, then the mortgage offer could expire. This could mean that the buyer has to take a more expensive mortgage that they’re now unable to cover repayments on. So they might gazunder in order to be able to get a more affordable mortgage. 

Changes in regulations 

As a response to the pandemic the UK government introduced a stamp duty holiday in 2021. This ended in September, and led to many buyers reducing their offers for sales that were due to complete after the deadline to make up for the difference in stamp duty costs. 

The buyer senses weakness 

This is probably the most malicious form of gazundering. If the buyer senses that the seller is in a weak position with the sale of the property then they may gazunder in order to exploit their position. This could happen either because it had little interest to begin with, or they’re tied into an onward purchase. In situations like this the seller often has no choice but to accept the reduced offer. This can, unfortunately, affect their onward plans. 

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How to avoid Gazundering

Sometimes gazundering is unavoidable. But there are a number of things you can do to help you avoid gazundering when selling your house. 

Know your property’s value and price it realistically

There are two points rolled into one here. The first is that if you know your property’s value (i.e. you have a good understanding of its selling points and comparables in the area) then you’re going to be in a stronger position to push back on a reduced offer. A good place to start is with a free online house valuation

The second is setting a realistic price. If you price your property in-line with the market from the beginning and don’t accept unrealistic offers then you don’t expose yourself to as much risk that your offer will be reduced. This is because the buyer won’t feel like they’re getting a bad deal on the property. Whilst this doesn’t guarantee that you won’t suffer a price reduction, it can certainly help you avoid gazundering. 

Be transparent 

If you know that there are issues with your property that are likely to be uncovered in property searches or in the survey then it’s better to be honest and upfront about them when marketing your house. Any offers that you get are going to be a more accurate reflection of the property’s value and therefore your chances of getting gazumped are much lower. The negative information is going to come to light sooner or later. It’s better to get it out of the way at the beginning rather than risk disappointment further down the line once you’ve started to make your onward plans. 

Choose a good estate agent 

A good estate agent will help you pick the right buyer for your property. They’ll assess the buyer’s position, funding, and should have experience in spotting buyers that are opportunists and therefore help you avoid gazundering. 

 

Good estate agents prevent gazundering

 

It’s worth investing time in picking the right agent. They’ll act for you throughout the entire sale and typically tie you into a 16 week agreement, so you don’t want to end up with an agent who isn’t acting in your best interests. A good place to look for the right agent is by using comparison sites like getagent, asking family and friends, and looking around your local area to see which agents have the biggest presence. 

Be quick and keep communication flowing 

Gazundering is often used as a tactic by buyers to encourage sellers who are dragging their feet to pull their finger out and complete the sale more quickly. Make sure you’re providing your conveyancing solicitor with all requested information in a timely and accurate manner. This means your sale will progress more quickly and you’re less likely to get hit with a price reduction. Staying up to date with your conveyancer is critical if you want to sell your house fast

Agents and solicitors tend to prefer handling all communication between the buyer and seller. However, there’s nothing to say that you can’t communicate with them directly. If you’re able to build a relationship with your buyer then there’s a lower chance that they’ll try a sneaky price reduction at the last minute and you can avoid gazundering. 

Use negotiation tactics 

If there are issues surfaced during the conveyancing process that warrant a price reduction, and there’s no way to avoid being gazundered, then you could try using negotiation tactics to minimise the amount of money you lose. You should stand firm. Highlight the positives of your property, offer to meet in the middle between the agreed price and the new offer, and potentially include fixtures and fittings in the sale that weren’t in the initial sale agreement. 

Sell your house for cash 

Cash house buyers tend to move more quickly than those who are using a mortgage. Companies like SmoothSale who buy your house for cash can usually complete on a property in as little as 7 days. This means that you’re much less likely to suffer a price reduction based on a survey or search results. We buy any house in any condition, so get in touch if you’re just starting your property sale, or if you’ve been the unfortunate victim of a price reduction. 

Property chains aren’t an issue for cash buyers either. They aren’t depending upon the sale of their own property to get the funds to buy yours. If you pick a cash buyer you’re generally going to end up with a faster and more secure house sale and avoid being gazundered. 

Sell your house at auction 

Selling your house at auction can be a great way to avoid gazundering. As soon as the hammer drops the buyer pays a deposit at the agreed upon sale price. If they choose to back out of the sale or renege on that price then they will lose their initial deposit. 

Auction buyers tend to be more committed to a fast house sale and don’t mess around with price reductions. SmoothSale offer an online platform if you’re interested in selling your house at auction. Contact us on 0800 368 8952 to find out more, or see how you can get a quick house sale at auction and speak to the team. 

 

Closing thoughts 

Selling your property can be a long process, and getting an offer is just the first step towards completion. There are plenty of hurdles to overcome. Gazundering is unfortunately one of those things that can crop up and throw a spanner in the works. 

As a property seller your best bet is to arm yourself with knowledge of the conveyancing process. Use the tips contained in this guide to help prevent gazundering from happening in the first place. 

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Sell your house for cash to SmoothSale

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