Aside from being a funny and made-up sounding word, gazundering is a very real problem for UK property sellers. In the best case, it can leave sellers with less than what they perceive is their property’s true value. In the worst-case scenario gazundering can leave sellers unable to fund their next purchase, causing a knock-on effect in property chains.
What is Gazundering?
Gazundering is when a buyer goes back on an agreed price and offers a reduced amount of money for a property. This will typically happen just before the exchange of contracts is due to take place. A buyer can lower their original offer by hundreds or even thousands of pounds.
Gazundering can put a seller in a very tricky position. If they’re desperate to sell This could be due to their property being on the market for a while, the existence of a buyer’s market or other personal reasons. Gazundering is a practice that can be leveraged in a buyer’s market as there are more homes than people to buy them. Buyers are therefore able to command authority due to market demand.
A seller faced with a gazunderer can choose to refuse the revised offer. In this case, both parties will have to start again. In this scenario the buyer takes on more risk by gazundering. This is because the buyer will have accrued substantial legal fees at this stage in the process. Both parties will have also lost their time investments, not to mention the resolution causing a significant amount of stress.
Where gazundering is a major issue for sellers, gazumping can hamper home buyers. See what is gazumping.
Is Gazundering Legal?
Unfortunately, the answer is yes. It’s only after the exchange of contracts that a buyer is legally bound to go through with the purchase. Gazundering happens before any legally binding agreement has been entered into by the buyer. If a buyer attempted to lower their offer after contract exchange, they would be in breach of the contract.
The acceptance of an offer occurs relatively early in the timeline of the sale of a property. So, while the seller might consider their sale set in stone, gazundering can change this.
Nothing in Welsh or English law prevents an offer amount being lowered prior exchange of contracts. Gazundering is illegal in Scotland, however.
Why does Gazundering happen?
At face value, gazundering might seem like a heartless moneysaving tactic on the buyer’s end. However, there are some other possible reasons for gazundering.
Property survey results
A survey of your property may reveal defects. As these will potentially cost the buyer a lot of rectify, they may see fit to decrease their offer on the property.
Speed of sale
Delays to a sale going through can risk your buyer’s mortgage offer expiring. There’s then no guarantee they’ll be able to secure the same amount again. A buyer returning with a lower mortgage offer will likely be forced to offer less on the property.
Sometimes buyers can overestimate their finances due to the excitement around buying a new property. Over the course of the lengthy buying process however, they might have to re-evaluate.
Gazundering in other parts of a chain
Your buyer could also be selling a property. If they themselves got gazundered, they may not be able to afford the price they initially agreed for your property.
Relative value assessments
Many buyers will continue to browse the property market after getting their offer accepted. A major reason for this is due to the threat of another buyer ‘stealing’ the property with a better offer. If your buyer finds another home, they think is better value for money, they can use it to justify a lower offer on your property.
To avoid getting gazundered, sellers should aim to make their position as strong as possible.
- Review your property thoroughly and be transparent about issues.
- Don’t inflate your price.
- You and your solicitor move quickly with documents.
- Keep solid records and be accurate.
- Make sure you have a good quality estate agent.
Working with professionals who provide expert residential conveyancing services is a sure-fire way to maximise your defences against gazundering. Toomey Legal has years of experience helping home sellers achieve their goals with minimal stress.
If you’re looking for dependable legal services in residential conveyancing Newcastle, you’re in the right place. Contact the team at Toomey Legal today.