Gazundering is something of a seller’s nightmare! In this blog post, we will take a look at what gazundering is and discuss potential ways to decrease the risk of it occurring.
What is gazundering?
To put it simply, gazundering is when a buyer suddenly lowers their offer price just before contracts are about to be exchanged based on a previous higher price.
What is the difference between gazundering & gazumping
In a previous blog post, we discussed ‘gazumping‘, which is where an offer on a property is accepted by the seller despite them already accepting a previous offer. The key difference between gazundering and gazumping is that gazundering affects the seller due to a last-minute change, whereas gazumping affects the buyer.
Is gazundering legal?
Gazundering is completely legal, although it is often thought of as unethical. There is nothing to stop a buyer from altering their offer prior to contracts being exchanged. Whilst this can be frustrating for sellers, there’s nothing that can be done about it legally.
Common reasons for gazundering
There are a number of reasons which can lead buyers to gazunder. Some of the most common reasons include the following:
- Results of a Survey: The buyers may have already had an offer accepted prior to undergoing a survey. Once the buyers have called a surveyor in to look at the property, the surveyor may find issues or damage relating to the property that causes the buyers to alter their valuation of the property. This is understandable, because if thousands of pounds worth of damage is to be discovered during a survey, it is more than reasonable for this to be knocked off the property price.
- Change of Heart: Because nothing is certain in the property market, buyers may continue to look for other properties even after having an offer accepted. If they look elsewhere and find a property for sale which they think is better value for money, they may then alter their initial offer in an attempt to get a better deal on the original property.
- Chain Reaction: The person buying a property may also be trying to sell their own property at the same time. This means that the buyer may be susceptible to gazundering on their property, which can cause a chain reaction and lead to them gazundering the new property they are trying to buy.
- Miscalculations: This can happen for a number of different reasons. Buyers can often get initially excited and offer more for a property than they can actually afford, which causes them to reassess and therefore make a lower revised offer.
These are just examples of some of the common reason a buyer may gazunder. However, there are numerous different reasons as to why it might occur, and sometimes buyers are just looking to get the price down to as cheap as possible.
How to avoid gazundering from happening to you
It can be difficult to avoid gazundering completely, as there are so many different reasons it can occur, and you never know how a buyer is going to act. However, there are some measures you can take that can lessen the chances of gazundering occurring.
- Set a Realistic Property Value: If you value your property too highly, it is more likely that buyers will end up gazundering, especially if they see other similar properties on the market that are going for a much lower asking price. Setting a realistic property value will likely attract more potential buyers, as well as reducing the risk of them gazundering you later down the line.
- Consider the Chain: If you have the choice, it can be less risky to sell to a buyer that isn’t also looking to sell their own property. Of course, if you only have one potential buyer then there’s not a lot you can do, but this is something to consider if there are multiple buyers interested in your property
- Be Open about Property Issues: If you are open from any property damage or issues with the property from the start, you are more likely to build up trust with the potential buyer. Trying to hide any issues is a risky move, as they will likely be uncovered by a surveyor which will likely lead to the buyers wanting a price reduction.
- Offer to Pay the Costs of Any Issues Found by Surveyor: It is a good idea to let the buyer know you are willing to cover the costs of any issues discovered by the property surveyor. This is likely a better solution than letting the problems be discovered by the surveyor, as the buyers will be more likely to gazunder.
Many sellers are concerned about gazundering, with up to 45% of sellers reportedly having the fear. Unfortunately for sellers, it’s not an uncommon occurrence, so it is best to be as prepared as possible and to set realistic valuations and expectations.