Gazundering – What’s it all about?

Recent statistics indicate that nearly a third of property sellers have reported being gazundered by their buyer.

What is gazundering?

You have probably heard of gazumping, where a seller accepts a higher offer from another party on a property you are in the process of buying.

Gazundering on the other hand affects the seller and is when a buyer lowers their offer on a property at the last minute, often just before contracts are exchanged. This puts the seller in a tricky situation where they must decide whether to accept the lower offer or reject it and risk losing the sale.

Why does this occur?

This can happen for a number of reasons.

• Survey / valuation results – the buyer’s survey or mortgage valuation may reveal issues which could down value the property or which may cost the buyer money to rectify. They may therefore wish to renegotiate in view of this.
• Chain issues – the buyer may have had a reduction in their sale price, which could mean they are no longer able to pay the price they originally offered.
• Miscalculation / change of heart – the buyers may have initially over offered in the excitement of making an offer. As time goes on and they review their calculations, they may wish to reduce their offer.
• Market changes – property prices are always fluctuating and it may be that there has been a reduction since the buyer made their initial offer. If the property is no longer valued at their initial offer, they may wish to reduce this.
• Competition – buyers often continue looking at properties after they agree a sale “just in case”. If they find another property they prefer at a better price, they may reduce their offer.

 What can you do to avoid this?

 Whilst there is no guarantee of avoiding this since nothing is legally binding until exchange of contracts has taken place, there are things a seller can do to reduce the chances of this happening.

• Be realistic about the value of your property – If you set your asking price above the market rate, there is more chance of a buyer reducing their offer later down the line. A buyer may be tempted to make a higher offer to secure the property that they have fallen in love with, but their survey / mortgage valuation may result in them reducing their offer.
• Don’t try to hide any issues – the buyer’s survey will likely highlight any issues and the buyer is encouraged to carry out their own searches and investigations into the property and the surrounding area. If anything comes to light, the buyer is likely to either withdraw from the purchase or lower their offer.
• Choose a good agent and solicitor/conveyancer – delays are often the root cause of gazundering so ensuring you have a good agent and solicitor/conveyancer acting on your behalf who will help progress your sale quickly and smoothly.
• Consider the chain – as mentioned above, one of the reasons for gazundering can be because the buyer has had their own sale price reduced. You should therefore give careful consideration when accepting an initial offer as to the position of the potential buyer.
• Carefully review your finances – particularly if you are in a chain, you should do your figures and work out the lowest price you can afford to accept. This will mean you are prepared to negotiate should the buyer reduce their offer.
• Keep things moving – keep in regular contact with your solicitor/conveyancer and estate agent and action any requirements on your part as soon as possible, such as signing documents or providing answers to enquiries. This will help to avoid delays and keep your sale progressing.

How to deal with gazundering as a seller

If you are selling a property and your buyer ask you to reduce the sale price, you should first try to ascertain the reason behind this as it will likely determine how you respond. Your solicitor/conveyancer can then discuss your options with you and advise on the best course of action depending on your circumstances. These options are;

• Refuse the lower offer – if you feel that the buyer’s lower offer is unfair and they are just trying their luck, or if accepting their lower offer would mean that you can’t continue with your own purchase, this may be your only option. This could result in the buyer backtracking and agreeing to proceed at the original price, or they may withdraw from the sale altogether. This can therefore be a risky strategy.
• Re-negotiate the sale price –this can often be successful if the buyer is looking for a reduction due to survey issues. You could negotiate and agree a new price somewhere in the middle, offer to carry out some of the works needed to rectify the issues revealed in the survey or include certain additional fittings and contents within the sale.
• Accept the lower offer – If you are concerned about finding a new buyer or you have a related purchase, you may decide to accept the lower offer unconditionally in order to continue with the sale. Alternatively, you may wish to attach some conditions to this, such as exchanging contracts by a certain date to put the buyer under pressure to finalise the sale quickly.

Speak to our expert team of residential conveyancing solicitors if you need help with Gazundering.