What is gazundering and how to stop it
If you're considering selling your home, you must get clued up on gazundering.
The UK property market is currently experiencing an epidemic of gazundering, leaving thousands of home sellers frustrated and out of pocket.
If you’ve never heard of gazundering – it’s similar in nature to the equally dreaded gazumping, but there are several key differences.
Let’s take a closer look at gazundering, what it is, and how you can help protect yourself.
What is gazundering?
Gazundering is the term used when a buyer reduces the amount of an offer they made on a property after the seller has accepted that buyer’s initial offer.
It usually happens just before the exchange of contracts, leaving the buyer with the choice between accepting a reduced sum for their home – or beginning the selling process from scratch.
This is a difficult choice, as most sellers sink significant resources into progressing an accepted offer. Declining the lower offer at this stage can lead to a loss of both time and money – as well as the emotional fallout that comes with it.
Gazundering is considered extremely bad practice in the property world, and doing it definitely won’t win you any friends. However, it's perfectly legal, and there are no regulations in place to help sellers avoid being gazundered. This means it could easily happen to you during your next house sale.
Gazundering – stressful and costly
Whether it’s keeping the house in a constant state of visitor-ready cleanliness or letting perfect homes slip through your fingers as you wait for an offer on yours – home selling can be a time of heightened stress.
So, when you accept an offer on your house, it can feel like a huge relief. You might tell your friends, family and colleagues that you’re finally on the move as you begin to make arrangements for your upcoming sale.
This is where the problems can begin.
A buyer who previously made you an offer you couldn't refuse can, perfectly legally, decide to withdraw their initial offer and replace it with a new, lower offer. If you, as the seller, have already made steps to complete the sale, you're more likely to accept the lower offer so that things continue to move along smoothly – something gazundering buyers know very well.
Usually, when we sell our home, we buy a new one at the same time. This means there is a tight timeframe in place during which the sale and purchase must align – or you risk losing out on the property you have your heart set on.
Gazundering buyers know this and, unfortunately, can take advantage of a seller who has already found the property they want and is itching to complete the sale of theirs.
Why being gazundered costs money
It’s not just frustrating and delay-causing, either. Being gazundered could cost you some serious cash.
One of the first things you should do when you accept an offer on your property is instruct a conveyancing solicitor to take care of the legal side of transferring ownership of the property to your buyer.
Conveyancing fees will cost sellers up to £1500, and the kicker is – they’re completely non-refundable. This means that if the sale doesn’t go ahead for some reason, you lose out.
Is gazundering common?
Gazundering is relatively common in the UK, and it’s suspected that it’s on the rise.
1 in 4 property sales currently falls through, with gazumping the leading cause of this in England and Wales, according to the Home Owner’s Alliance. Gazundering might be about to give the all-too-common gazumping a run for its money, with property insiders believing it’s on the increase.
This could be due to the cost of living crisis, which sees people turn to
Is gazundering justified?
There is only one circumstance where it's acceptable to reduce your offer, and that's when the results of the conveyancing or home survey have turned up something unexpected, which an independent professional believes affects the value of the property.
In cases such as these, it’s expected that the buyer would try to renegotiate the initial offer, which isn't always considered true gazundering.
Often, though, it’s done by buyers hoping to get a bargain.
How can I prevent gazundering from happening to me?
The bottom line is that you can’t. If your buyers have decided to lower their offer at any stage before the exchange of contracts, they are perfectly entitled to do so.
This could be right up until the day you exchange – and sneaky gazunderers have been known to pull this trick.
However, you could try:
- Being firm
To try to minimise your risk of gazundering, you could make it clear that you won’t accept a penny less than the offer you first accept – and imply there is a queue of buyers waiting to pay your asking price or above. Letting your buyers know you're prepared to find another buyer can help them honour their original offer.
This is risky, though, as not all sellers have a queue of buyers to choose from, and the buyer might call your bluff.
- Offering to rectify
If the buyer had identified an issue they weren't aware of when they made their initial offer, they might be justified in offering you a lower amount. You could compromise by offering to rectify the work that is needed as part of the deal. This only works with smaller issues, such as cracks in plaster or faulty toilets, for example. Major stuff might mean you bite the bullet and take a price drop.
Gazundering insurance can safeguard your upfront fees
You might think gazundering is all bad news for sellers and that you're at the mercy of buyers out for a discount at your expense. Don't worry, though – help is out there in the form of Home Sellers Protection Insurance.
Taking out Home Sellers Protection Insurance is the only thing you can do to protect yourself against losing out on hefty conveyancing fees as a result of gazundering.
Rhino is the UK’s leading expert in Home Seller's Protection Insurance. Call Rhino today to find out how you can reclaim conveyancing fees up to £1,650 with cover from just £69.