words Al Woods
As a house seller in the UK, there are several pitfalls to avoid if you want to make it through successfully to completion, from property chain problems to noisy neighbours disrupting viewings.
In the past year, the housing market has experienced an unexpected boom due to the COVID-19 pandemic. It’s a seller’s market with properties getting snapped up as soon as they hit the market, or even before.
But property industry experts are forecasting that the market will slow “dramatically” in the autumn. In a slow market, the buyer is king, and “gazundering” becomes a real risk for sellers. So what exactly is gazundering, and should you be worried about it?
What is Gazundering?
Gazundering is when a buyer lowers their offer just before the exchange of contracts. At this point, the seller is committed to the transaction and refusing the new offer is often difficult if not impossible — backing out of the sale could mean wasted time and money and potentially losing the dream house they want to buy.
Gazundering is not the same as the more commonly known “gazumping”. This is when the seller accepts an offer from one buyer then later rejects it when a subsequent bid comes in higher.
Gazumping is more common in a buoyant, sellers’ market. Gazundering is more of a risk in a slow buyers’ market when more properties are for sale than interested buyers wanting to purchase them.
Is Gazundering Illegal in the UK?
No. Buyers and sellers are legally entitled to change their minds about a property sale at any point before the exchange of contracts, which typically occurs around a week before a sale completes.
Why Does Gazundering Happen?
Gazundering can happen for many different reasons. It’s not always — or even often — a deliberate buyer’s ploy to knock down the sale price. Potential reasons why a buyer will reduce their offer last-minute include:
- Unexpected survey results — if the survey shows a major problem that would cost a lot to correct, a buyer may want to renegotiate the sale price to account for this unexpected expense.
- Problems with financing — if the buyer is unable to secure the mortgage they need, lowering their original offer could be an attempt to keep the sale going through at a price they can afford.
- A change of heart — the buyer could get cold feet about making such a big financial commitment, especially if they’re first-time buyers or they’re upgrading significantly from a smaller, more affordable property.
- Property chain problems — if your buyer is in a chain and problems have arisen that means they are out of pocket — perhaps they have been gazundered themselves? — they could try to claw back their losses by reducing their offer.
This is far from an exhaustive list, and gazundering can happen for a whole host of reasons. Whatever the reason, it can be both stressful and expensive for you as the seller so protecting yourself as much as possible against gazundering is a good idea.
How Can I Avoid Gazundering?
When it comes to selling property, some things are out of your control. However, there are a few things you can do to reduce the chances of being gazundered.
- Set a realistic asking price
The easiest and most effective way to avoid being gazundered is to value your house realistically. Setting a high asking price is more likely to result in negotiations further down the line when the buyer is no longer acting on emotions and impulse (which they may have been when they first made their offer).
- Make sure the buyer is serious
Ask your estate agent to check that the buyer at least has an agreement in principle from a mortgage company (if they require financing to make the purchase) and that they are otherwise in a position to buy. For example, they have found a seller for their current home. It’s also a good idea to encourage a second viewing to ensure that the buyer really wants to purchase your home.
- Don’t hide any problems with the property
If the roof leaks or you have an ongoing dispute with a neighbour, there’s little point trying to hide these issues from a potential buyer. They will discover the problems when a survey is conducted, during viewings or when they receive the property information questionnaires that every seller is asked to complete. Concealing something that may put a buyer off will increase the chances of the buyer dropping their offer at the last minute or pulling out of the sale altogether.
- Choose a chain-free buyer
A buyer could reduce their offer on your home because they have been gazundered themselves. This won’t happen if you find a chain-free buyer to sell to. Of course, this can be easier said than done. If you want a guaranteed cash sale to a chain-free buyer, one option is to explore property buying companies.
A genuine quick house sale company will have the funds to buy your property for cash in as little as seven days. There’s no risk of property chain problems or cold feet affecting the sale. It will mean a slightly below market value sale price, but you could save thousands in estate agents fees and wasted expenses if the sale falls through.
- Compromise
Losing a house sale last minute can be expensive and stressful. Accepting a lower offer than you expected may feel like a bitter pill to swallow, but it could be the best compromise. If the price drop is due to issues arising from the survey, it may be worth considering paying for the repairs needed. This could save the sale and save you money in the long run. Any future buyer is likely to have the same concerns so you’ll probably end up getting the work done to sell it anyway.
Gazundering is typically more of a concern for sellers in a slow buyers’ market, but it can happen at any time. You can take some simple steps to reduce the risk, but be willing to accept compromise and explore alternative solutions if the worst happens. Starting again and finding a new buyer on the open market may not be the most cost-effective choice.
