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What is Gazundering and How Does It Affect Your House Sale?

Estimated reading time 7 minutes

With the average time to sell fluctuating around the 3 to 6 month mark, it can be extremely frustrating watching other people sell their property fast, while you wait.

One of the common causes of a sale not going through is the price. And not for the reasons you may think. Your house is valued correctly, it’s desirable, there have been lots of viewings and then you get an offer. You accept it, things are picking up pace. Then, right before the exchange of contracts, the buyer throws in a much lower offer….you’ve been gazundered.

Suddenly the sale grinds to a halt as you try to work out what to do. You’ve waited so long for this sale to come to fruition.  Don’t worry, in this blog, we are going to explain exactly what gazundering is, how it will affect your sale and what you can do to still get that sale completed.

What is gazundering?

Most of us have heard of gazumping, the practice where a seller accepts one offer only to accept a higher one from another party right before things reach the exchange stage.

Well, gazundering is much like that, except this time it’s the buyer who throws a curveball. They make an offer, you accept it and then right before exchange, they drastically reduce their offer, leaving you with little wiggle room to keep your property plans on track.

Why do buyers gazunder?

A buyer may choose to gazunder you for a variety of reasons. They might simply decide to try it on and see if, with such short notice, you’ll take any offer. They then save a large chunk of cash and still get the house they want. This can be a common practice if they know a chain is involved as they know you need to sell to complete your purchase.

Sometimes, it might be that some issues with the property are bothering them, and they feel it is only right they come back with a reduced offer. If the survey has shown something that could cost a lot to repair, they may want to see their offer reflect this.

Occasionally, a buyer may simply be trying to keep the purchase alive. If the sale has been delayed for any reason, their mortgage offer may come to an end and the only other mortgage they can get is for less than your asking price. So keen to secure the house are the potential buyers that they throw in a low offer just to see if they can still secure it. It should never really get this far though as the survey results, mortgage offers, and exchange should all align well enough for plenty of notice to be given should there be any issues.

Is gazundering illegal?

The property sale is not legally binding at this stage so a buyer can reduce their offer as they see fit without being in breach of any law.

It is frowned upon though and it is not surprising to see sellers reject the offer and sit tight waiting for higher offers to come in at a later date.

How does gazundering affect your house sale?

Gazundering affects your house sale in quite a significant way. You face that tricky conundrum of whether to sell and accept less cash, almost as if you have been forced to do so. Or stick it out, reject the offer and hope a new offer comes along that aligns with the true value of the home.

In some cases, perhaps due to a divorce, financial troubles or a death in the family, a sale is often something you need to do. Having someone reduce the offer at the last minute might be the least of your worries and simply selling up is all that matters. However, some alternatives may be more cost-effective. Cash house buyers, for example, offer less than the asking price but their offer may still eclipse that of those gazundering you.

You could also find when you get gazundered that in rejecting the offer, you miss out on completing on your dream home and you’ll need to weigh up whether the loss in cash can be covered by the desired new home. However, the lower offer may make that dream home unobtainable financially. This could mean it’s better to wait for a new offer and find a new home.

How can I avoid being gazundered?

In some cases, there isn’t much you can do. It may have been the plan of the buyer all along. However, in many cases, people gazunder for a reason they feel justified. If they can justify their low offer, you might find that there were a few things you could do to avoid it happening.

Set a realistic asking price

Some estate agents will overpromise and under-deliver. Their inflated asking price for your home may make your eyes light up with pound signs but is it truly resplendent of a property in your area? People may offer this price just to get an “in” and then drop that offer significantly before you exchange.

In other cases, you may have priced it high thinking that should lower offers come in, they will still align with the typical and expected asking price. This can be a dangerous game to play as you could end up with no offers, or those where buyers come in high to secure the home, then drop low right at the end.

Assess your market

Those keen on buying your home may all make offers. It isn’t wise to just take the first or the best offer that comes your way. Look to see if the buyer has a chain or not, find out whether they are looking at other properties and get a feel for what they are looking for. Buyers with no chain, for example, will feel they are in a strong position and as a result, feel they can drop their offer the closer it comes to completion. You might also notice that overly keen buyers or those desperate to buy will attempt to gazunder you. Their platitudes about your property or their urgency to buy, are perhaps being used to convince you that they will not pull out and will definitely purchase your home.

Be transparent

If there are problems with the property, tell people. Hiding issues and hoping that the buyer won’t notice is not a wise tactic. The survey will flag up any problems and then give the buyer the chance to drop their price, and perhaps, due to your dishonesty at the start of the process, they may not do this until right before you exchange.

Ensure a survey and conveyancing is completed early

As you saw above, a survey stands to bring up many issues, so see that the buyer does this early. That way should any problems arise; you’ve got more time to either rectify the issues or negotiate a little on the price. It may still be a lower price than the asking price but not by as much!

Conveyancing can be a long-drawn-out process, if you have all the paperwork in place from the get-go, you give the buyer less time to start thinking about a reduced offer.

Speak to a cash buyer

Cash house buyer companies may offer less but they guarantee your sale in a timeframe that suits you and avoids the risk of a chain break. In some cases, the amount they offer is not as low as the offer made by those gazundering meaning that whilst losing out a little, it is not quite as severe as it may have been.

Gazundering can be demoralising and see your property plans in tatters, but it can be avoided by following our tips above. If you want to sell your house fast, after being let down by buyers in the past, speak to our team. We can make a quick offer, and should you accept it, have your house sold in just seven days. What’s more, we sell your house for free, with no legal fees for you to worry about. So, the amount you are offered is the amount you receive. Speak to our team today to find out more.