If you are new to the property world, you will have probably never heard of gazundering— however, it can be a major concern for anyone who is selling a house, flat, or bungalow.

But what is it? Essentially, gazundering is the act of a buyer reducing the amount of money they are prepared to pay for a property after they have already agreed a purchase price.

This typically happens just prior to the exchange of contracts.

For the sellers this offer could have a devastating effect on their house sale by causing their chain to break and throw them back to square one. As such, sellers often feel obligated to accept the new, lower offer. This could be a small difference of a few hundered pounds. Or in extreme cases it could be £10,000’s below what you orignally thought was the true value of your property.

In other situations, this could leave sellers in the lurch, if for example, they can no longer fund their own planned move.

01 | Is gazundering legal?

Unfortunately for people trying to sell a property, gazundering is entirely legal.

Nothing about dropping the amount offered for a property prior to the exchange of contracts breaks any English or Welsh law.

This is because house sales are always agreed ‘subject to a contract’, which at this point is not legally binding and can be cancelled. Until the exchange of contracts, there is nothing legally binding a buyer to complete on the purchase of a property and at a certain price.

However, following the exchange of contracts, both parties are legally bound to complete the transaction, and gazundering is no longer possible.

Attempting to gazunder after the exchange of contracts would in fact put the buyer in breach of contract.

However, gazundering is not legal in Scotland.

02 | Is gazundering fair?

Lots of people think it isn’t.

The UK Homeowners Association website says that usually buyers gazunder sellers when they know they are in a stronger position.

This is because sellers are often in chains and have taken their house off the market. This gives buyers the opportunity to take advantage of sellers just to save a few thousand pounds.

None the less, there are a few situations where it is more reasonable for a buyer to reduce their intial offer shortly before exchange of contracts.

A buyer may have had a survey done, revealing previously unknown issues that could be expensive to fix, such as damp, a leaking roof, or even potential structural issues.

Alternatively, property prices could have also dropped substantially in the time since they made the offer. Some house sales take many months to complete and the housing market can be fragile. Changing the offer to reflect this is normal.

03 | How to avoid being gazundered?

There is a lot of advice online about how to avoid being gazundered when selling your house.

Estate agents Sold.co.uk say that avoiding being gazundered starts with finding the right buyer, suggesting that you pick a buyer without a chain.

While you shouldn’t go turning away good offers from buyers in a chain, buyers without a chain are seen as a safer choice. They are more likely to move quickly and are less likely to have additional costs or affordability issues to pass on.

They also advise sellers to be realistic about their asking prices as overpriced homes are at more risk of gazundering. Being upfront about a defect could be the better way to go as it will only be highlighted in the property survey anyway.

The UK Homeowner’s Association also advises sellers, saying that attempting to set a date for exchanging contracts as early as possible can also help prevent potential gazunderers.

This is because it puts the pressure on the buyer and gives them less of a chance or excuse to change their offer.

Sellers should also ensure that their solicitors stay in contact with the buyer’s solicitors and consider contacting the buyer themselves.

While solicitors do not generally advise the seller contacting the buyer, building a relationship can help prevent some people attempting something underhanded, like gazundering.

04 | How to fight back against gazundering?

Even if a seller does everything right, there is still a chance they will be gazundered.

It pays to be prepared for someone to try and gazunder you, and for you to have a plan in place for how to respond.

Online advice tells sellers to “fight fire with fire”, to negotiate hard, and never to accept the first gazundered price given to them.

Offer to renegotiate and meet in the middle attempting to find a middle ground.

Alternatively, you can just say no, and put your house back on the market. However, this is unlikely to help you if you have been gazundered due to falling property prices. Or if for some reason you simply need a quick sale of your property.

Selling you house at auction is an option to sell fast if necessary, and can be a reasonable response to being gazundered. Although, this comes with its own pitfalls, including an uncertain sales price, and substantial auctioneers’ fees, often including a 2-3% commission. And this if indeed it sells at all.

Alternatively, you can sell your house via one of many specialist property buying companies. Although they may not offer you the full value of your house, companies like this guarantee a quick sale, and can be very useful for repairing a chain.

If you have any questions regarding just how quickly you could sell your property, simply contact one of our team at National Property Buyers who will be only too happy to help.

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